The sustainable development of the agricultural waste power generation industry (AWPGI) can reduce environmental pollutant emissions and ameliorate energy shortages. However, the current development of AWPGI lacks sustainability. Hence, to address this issue, a Decision-Making Trial and Evaluation Laboratory (DEMATEL) model, considering relative index weight, is utilized, and the fuzzy composite DEMATEL model is employed to identify the interrelationship of the internal system criteria. According to the obtained results, the system’s cause factors include reducing greenhouse gas (GHG) emissions, investment costs, management costs, improving technology maturity, energy conversion efficiency, technical complexity, and safety and reliability. The effect factors include the nonrenewable energy utilization, reduction of agricultural waste and production costs, competitiveness, social acceptability, regional development contribution, government support degree, water use, sound pollution, and job production. The internal relationships between the mentioned two factors are further verified, indicating that diverse cause factors can affect different effect factors. Moreover, systematic policies are designed to improve the power generation industry’s sustainability based on the obtained results. The findings can help power generation companies and government decision-makers make effective decisions to promote the sustainability of the AWPGI.