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The insertion of biogas in the sugarcane mill product portfolio: A study using the robust optimization approach

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  • de Moraes Dutenkefer, Raphael
  • de Oliveira Ribeiro, Celma
  • Morgado Mutran, Victoria
  • Eduardo Rego, Erik

Abstract

Biogas generation from vinasse, a problematic residue from the ethanol process, has been discussed as an alternative to increase sustainability and profitability in the Brazilian sugarcane industry. Recent studies have widely assessed the technical feasibility of biogas projects. However, the economic impact of this new product on the overall results of sugarcane mills still needs to be addressed, as this is still an incipient technology in the sector. As price risks represent a significant issue for production decisions in the sugarcane industry, and they may be addressed through portfolio diversification, this paper aims to examine the implications of the insertion of biogas into their product portfolios. A risk measure broadly used in literature, CVaR, was applied in the optimization model proposed. Additionally, a robust counterpart for the model was developed to deal with price uncertainties and assess their potential impact on the portfolio decisions. The models were validated through both a ceteris paribus and a factorial analysis, and the results obtained allowed the understanding of the role that biogas production may play in the sugarcane industry. In both models, standard and robust, the use of biogas for the substitution of diesel stands out as the only economic application. The results also indicate that, for most of the price scenarios performed, electricity generation from biogas is not economically feasible. Furthermore, it was highlighted that the insertion of biogas into the portfolio yields a gain in the overall efficient frontier of sugarcane mills. Thus, in conclusion, this study presents strong evidence of the economic feasibility of biogas generation in the Brazilian sugarcane industry and the model developed to perform this analysis is shown to be a powerful tool to further assess the impact of price policies on their production decisions.

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  • de Moraes Dutenkefer, Raphael & de Oliveira Ribeiro, Celma & Morgado Mutran, Victoria & Eduardo Rego, Erik, 2018. "The insertion of biogas in the sugarcane mill product portfolio: A study using the robust optimization approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 729-740.
    • Handle: RePEc:eee:rensus:v:91:y:2018:i:c:p:729-740
    DOI: 10.1016/j.rser.2018.04.046
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    1. Lemos, S.V. & Salgado Junior, A.P. & Rebehy, P.C.P.W. & Carlucci, F.V. & Novi, J.C., 2021. "Framework for improving agro-industrial efficiency in renewable energy: Examining Brazilian bioenergy companies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 152(C).
    2. Fuess, L.T. & Cruz, R.B.C.M. & Zaiat, M. & Nascimento, C.A.O., 2021. "Diversifying the portfolio of sugarcane biorefineries: Anaerobic digestion as the core process for enhanced resource recovery," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    3. Mutran, Victoria M. & Ribeiro, Celma O. & Nascimento, Claudio A.O. & Chachuat, Benoît, 2020. "Risk-conscious optimization model to support bioenergy investments in the Brazilian sugarcane industry," Applied Energy, Elsevier, vol. 258(C).
    4. Kanwal Iqbal Khan & Syed M. Waqar Azeem Naqvi & Muhammad Mudassar Ghafoor & Rana Shahid Imdad Akash, 2020. "Sustainable Portfolio Optimization with Higher-Order Moments of Risk," Sustainability, MDPI, vol. 12(5), pages 1-14, March.
    5. Schiochet Pinto, Luane & Pinheiro Neto, Daywes & de Leles Ferreira Filho, Anésio & Domingues, Elder Geraldo, 2020. "An alternative methodology for analyzing the risk and sensitivity of the economic viability for generating electrical energy with biogas from the anaerobic bio-digestion of vinasse," Renewable Energy, Elsevier, vol. 155(C), pages 1401-1410.
    6. Kashanian, Motahareh & Pishvaee, Mir Saman & Sahebi, Hadi, 2020. "Sustainable biomass portfolio sourcing plan using multi-stage stochastic programming," Energy, Elsevier, vol. 204(C).

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