Torrefaction is a promising bioenergy pre-treatment technology, with potential to make a major contribution to the commodification of biomass. However, there is limited scientific knowledge on the techno-economic performance of torrefaction. This study therefore improves available knowledge on torrefaction by providing detailed insights into state of the art prospects of the commercial utilisation of torrefaction technology over time. Focussing on and based on the current status of the compact moving bed reactor, we identify process performance characteristics such as thermal efficiency and mass yield and discuss their determining factors through analysis of mass and energy balances. This study has shown that woody biomass can be torrefied with a thermal and mass efficiency of 94% and 48% respectively (on a dry ash free basis). For straw, the corresponding theoretical energetic efficiency is 96% and mass efficiency is 65%. In the long term, the technical performance of torrefaction processes is expected to improve and energy efficiencies are expected to be at least 97% as optimal torgas use and efficient heat transfer are realised. Short term production costs for woody biomass TOPs (torrefied pellets) are estimated to be between 3.3 and 4.8 US$/GJLHV, falling to 2.1–5.1 US$/GJLHV in the long term. At such cost levels, torrefied pellets would become competitive with traditional pellets. For full commercialisation, torrefaction reactors still require to be optimised. Of importance to torrefaction system performance is the achievement of consistent and homogeneous, fully hydrophobic and stable product, capable of utilising different feedstocks, at desired end-use energy densities.