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Summary: At the present day, the issue of the further development of energy economics, industry, and other areas are quite urgent, taking into account the environmental component and not excluding the economic component of this problem. It is possible to reduce the negative impact on the environment by switching to biofuel. In addition to the environmental benefits, biofuels are beneficial in use, also to the companies themselves, as it is more cost‐efficient. The production and use of energy by the companies involve distributed generation. The purpose of the paper is to analyse the economic prospects of replacing distributed generation with biofuel. Results: within the framework of the study, the concepts of distributed generation, biofuel, its main types, as well as some of the advantages of biofuel are defined. Some economic aspects are considered, mainly in the direction of biofuel‐related benefits. In addition, the paper considers the distributed generation market development and the use of biofuel in Russia in comparison with other countries, the main problems were identified, and the main prospects in this direction were considered. Prospects for further research: due to the subsequent study of biofuel usage, taking into account economic and environmental aspects. The applied value of the material: the paper is of practical value in the framework of generalising data on the distributed generation market and the bioenergy market in the Russian Federation and foreign countries. [ABSTRACT FROM AUTHOR]