The increasing emphasis on renewable energy sources has fostered interest in the use of biomass waste as a potential power source. Despite this, few studies have explored its application in powering drying machinery. This study presents the design, fabrication, and performance testing of a biomass-powered dryer, specifically developed for chili drying. The constructed dryer, featuring a drying box, biomass furnace, and flue gas passage, is distinguished by its simplicity, cost-effectiveness, and its capacity to operate during inclement weather due to its reliance on flue gas derived from biomass combustion. Given the rising culinary demand for chili powder, effective drying of chili prior to powdering is crucial. This research furthers this goal by conducting an energy and exergy analysis of the flue gas dryer, operating at varying flue gas velocities of 8, 13, 14, and 15.5 m/s, during the chili drying process. In addition, sustainability indicators such as the Waste to Energy Ratio (WER) and Sustainability Index (SI) were also investigated. Preliminary findings indicate that the biomass-powered dryer operates effectively under indirect-forced convection mode, with flue gas velocity significantly influencing the energy and exergy outcomes of the dryer. Peak efficiencies for both energy and exergy were found to be 22% and 23.99%, respectively, at a flue gas flow of 13 m/s.