This paper investigates the thermal efficiency of solar dryers using different insulation materials, focusing on a bio-composite derived from discarded date palm residues. The current study introduces this sustainable material, created from local palm waste, as insulation material in Solar Air Heaters (SAHs) for agricultural products drying purposes. Thus, two SAH models are designed, fabricated and compared for their thermal efficiencies: the first one used the bio-composite (Model A) as insulation material and the second one is equipped with a polystyrene sheet in the rear insulation (Model B). The thermal performance of these models are assessed, alongside the drying kinetics of Algerian chili at different maturity stages under the climate of Biskra, Algeria. A local product that we aim to promote (Arab chili), widely used in southern Algeria during the harvest period in summer and early spring. It is generally grown using traditional techniques despite its very delicious taste, while (Gazelle’s horn) chili is grown in greenhouses throughout the year. Although the polystyrene-insulated SAH shows slightly better thermal efficiency, the bio-composite model achieves satisfactory drying temperatures, drying chili in 5 hours and 30 minutes.