Methods for drying of hard coal and lignite have a great impact on the economy and the environmental aspects of electricity generation processes. Another contemporary aspect of clean coal electricity production is the process for removing carbon dioxide (CO2). Oxy-fuel combustion seems to be one of the leading technologies here. The nitrogen, which is co-produced with oxygen in an air separation unit (ASU) - the integral element of the oxy-fuel power unit, is traditionally vented to the atmosphere. The main feature of ASU-waste nitrogen is however a near-zero moisture content at near-ambient temperature. Such a gas has a much higher potential for moisture absorption than ambient air, so the waste nitrogen may be effectively used as a drying medium at relatively low drying temperatures. The research being described here is focused on thermodynamic and economic analyses of the application of the nitrogen-based lignite dryer within large, lignite-fired oxy-fuel power unit. Simulation models for the power unit and dryer were built and solved for selected data describing fuel parameters, plant location and so on. Finally, economic assessment factors applying to a nitrogen-based dryer were calculated. The proposal for use of ASU-waste nitrogen has been positively verified from both a thermodynamic and an economic point of view. The calculated increase in overall oxy-fuel power unit net efficiency is ca 1.5%, and the internal rate of return (IRR) calculated from the viewpoint of all capital suppliers is ca 20%. (C) 2013 Elsevier Ltd. All rights reserved.