Simultaneous Infrastructure Investment and Operation Decisions for Bio-Refinery Networks

There is a growing interest and technological advances being made in converting biomasses into bio-fuels. Even though we are still years away from its full commercialization, it is important to begin to assess the economic feasibility of various emerging technologies and evaluate the advantages and disadvantages of different design and logistics options. In this presentation, we propose an optimization model that enables the selection of fuel conversion technologies, processing capacities and locations, and the logistics of transportation from forestry resources to conversion and from conversion to final markets. A mixed integer linear program (MILP) model is built and implemented in a commercial software package (GAMS) using databases built in Excel.

The MILP solves for (1) the optimal numbers, locations, and sizes of various types of processing plants and (2) the amounts of biomass, intermediate products, and final products to be transported between the selected locations, with the goal of maximizing the overall profit under present constraints. It also outputs the cost and profit data associated the selected network in a convenient form for analysis. The model is tested using a industry-representative data set that contains information on the existing wood resources, final product market locations and demands, candidate locations and sizes for different types of processing plants, and costs associated with the various processing units and transportation of materials, within the Southeastern region of the United States. We investigate: 1) Which parameters have major effect on the overall economics, and 2) benefits of going to more distributed types of processing network, in terms of the overall economics and the robustness to demand variations.