Production planning in sugarcane mills: new biogas technologies and optimal decisions

Abstract

The sugarcane industry in Brazil is one of the most relevant agricultural activities, greatly contributing to the domestic economy since the colonial times. Over the past 70 years, many public policies have affected the sugarcane business, placing sugarcane mills as important players in the national energy matrix as liquid fuel producers and electricity suppliers. Thereupon, studies have examined the potential use of vinasse, a problematic residue from the ethanol process, for biogas production. However, evidences show that its economic feasibility is highly dependent on large-scale production, which implicates the need for interactions among different refineries for the exchange of assets, such as biomass or electricity. An usual optimization method that has been applied in several different sectors is Portfolio Theory. The main goal of such types of models is to determine the efficient frontier for the trade-off risk-return. On one hand, it has been a successful technique for the support of product mix decision. On the other hand, it does not consider possible changes in process parameters and conditions with the variation in shares of each product in the portfolio. As such variations may greatly impact optimal decisions for product portfolios, they may not be neglected. Thus, another optimization method widely used for problems in chemical industries is the surrogate-based optimization framework, which, in turn, may be a feasible alternative to model the intrinsic relationships between portfolio decisions and process conditions. Thus, this project presents a proposal to address the portfolio problem in an interacting group of sugarcane mills in Brazil, combining optimization methods widely used in literature to deal with the particularities of each refinery's process conditions and find the optimal product mix for the group as a whole, maximizing profits while reducing economic risks. (AU)