Optimal design and operation of a second-generation biofuels supply chain

This article investigates how climate influences the value of adding preprocessing depots to a second-generation biorefinery’s supply chain. This is vital because humidity determines the amount of dry matter loss—exponential decay of energy content—suffered by biomass stored without preprocessing. The large volume of biomass required to fuel a biorefinery poses challenges in storage and in transportation. Further complications arise because the biomass is produced seasonally by hundreds of growers. Thus, recent failures of biorefineries may have been avoided, and future success may be achieved, by adding an intermediate layer to a biorefinery’s supply chain. A rigorous climate-based analysis of cost functions for each potential grower/depot pair leads to a stochastic program that optimizes the locations of depots, the assignment of growers to depots, and the volume of biomass stored fieldside vs. the volume stored as pelleted feedstock at depots. A computational study reveals that the humidity of the climate has much greater influence on the value of adding pre-processing depots to a second-generation biofuel supply chain than does transportation consolidation or any other parameter, endogenous or exogenous. Under favorable circumstances, our process reduces a biorefinery’s costs by over 30%, on average.