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

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. Recently, studies have examined the potential use of biomass residues (bagasse and vinasse) for energy purposes. However, market conditions in recent years have not been sufficiently attractive for producers to invest on new bioenergy generation, which calls for governmental interference. This project aims to support bioenergy in the Brazilian sugarcane industry by addressing the question of how to effectively incentivize bioenergy generation. Given the complexity of producers\' production and investment decisions, the methodological approach is computational by nature, and entails the application of portfolio theory in combination with surrogate modelling and superstructure optimization. The proposed optimization frameworks are illustrated in representative case studies, allowing key insights to be drawn. Results obtained based on historical prices showed a clear tendency for a sugar-oriented business, contradicting the expectation of interviewed experts for a future based on energy products. Prices in the regulated market of electricity were shown to play a relevant role in attracting an increase in generation efficiency, while the investors production and investment decisions show a high sensitivity to price risks. In addition, a detailed process modelling allowed for more reliable decision-making, and showed that simplified models may lead to risky investment decisions and shortfalls. Finally, as for technological routes, ethanol 2G is still not advisable at current investment costs, but biogas generation shows great potential for all three economic applications: diesel displacement, power generation and commercialization as piped gas. (AU)