Various studies have suggested that semi-natural grasslands could be a more ecologically beneficial source for biofuel production than intensively managed monocultures. In particular, it has been observed that the high level of species diversity in grasslands has a positive effect on several ecosystem functions (e.g. productivity). Ecological models are useful tools for analyzing the interactions of different processes in grasslands, which are assumed to be the underlying drivers of this positive effect. In this paper we present a review of the main processes included in existing grassland models and discuss the strength and limitations of existing approaches in the context of biofuel production. Most of the existing models (a) focus solely on one or a few single species, (b) do not consider competition processes adequately, or (c) do not follow the individual's development in the grassland community. This hinders a detailed analysis of the mechanisms and conditions that govern the ecosystem functions that are relevant for biofuel production such as productivity, stability, and carbon fixation. To bridge this gap, we propose a concept for a novel individual-based grassland model for temperate regions. Our approach covers a high number of species/functional groups, above- and below-ground intra- and inter-specific competition for different resources (light, water, nitrogen, space), and disturbances (due to management or climate change). Hence, it could facilitate comprehensive mechanistic analyses of the dynamics of semi-natural grasslands and their efficiency in biofuel production.