Integrated Investment and Operational Planning for Sugarcane-Based Biofuels and Bioelectricity under Market Uncertainty

TL;DR

This paper presents a stochastic optimization model for integrated investment and operational planning of sugarcane-based bioenergy facilities, addressing market uncertainties to support sector decarbonization and diversification.

Contribution

It introduces a two-stage stochastic model combining investment and operational decisions, incorporating risk measures and providing an open-source planning framework called OptBio.

Findings

Risk-neutral strategies favor sugar/ethanol production but are vulnerable to market volatility.

Risk-averse strategies promote diversification of biomass products.

Biomethane and hydrogen could become viable with favorable market prices.

Abstract

Sugarcane biomass is a strategic resource for the energy transition, particularly in Brazil, where it underpins electricity and ethanol production. Investment planning is challenged by diverse production pathways, price volatility, and feedstock variability. This work develops a two-stage stochastic optimization model integrating investment and operational decisions for sugarcane facilities. The model aims to support robust planning for diversified biomass plants, aiding the sector's decarbonization. The first stage defines capacity expansion under economies of scale through a power-law cost function. The second stage defines operational decisions under price and feedstock uncertainty, modeled via scenarios and Conditional Value-at-Risk. \answer{From an investor's perspective, the objective is to minimize risk-adjusted net costs. In addition to its methodological contributions, this work also provides an open-source implementation of the proposed capacity expansion planning framework, referred to as \textit{OptBio}.} A Brazilian case study shows risk-neutral strategies favor sugar/ethanol but are vulnerable, whereas risk-averse strategies promote diversification. Sensitivity analyses indicate biomethane and hydrogen may become viable with favorable prices, while biochar boost productivity and profitability.