Abstract Malaysia and Indonesia are the largest producers of palm oil product. The palm oil industry has contributed the biggest income to the countries for many years. Moreover, palm oils has emerged as one of the most important oils in the world’s oils and the market of fats. About 90% of palm oil is used as food related products worldwide, and the other 10% is used for basic raw material for soap. There are more than a hundred palm oil processing mills in the two countries. As such, a lot of savings can be done by using the fiber and shell from the processing wastes as an alternative fuel for electricity generation for this industry. This paper deals with energy conversion from the fiber and shell of the industry wastes as an alternative energy source for the palm oil mill industry in the two countries mentioned. The study concentrates on using the fiber and shell obtained from the processing of palm oil as fuels for the boiler instead of fossil fuel. In addition, the possibility of excess air and fuel air ratio for the fiber and shell combustion process is also discussed. Furthermore, it has been found that the shell and fiber alone can supply more steam and electricity than is required. Some palm oil mills in Malaysia and Indonesia have applied this strategy successfully. The FELDA palm oil mill, with the capacity 30–60 tons FFB/h, in Sungai Tengi, Selangor, Malaysia has been selected for this research.