Biomass-ethanol supply chain optimization: Dynamic facility location planning under changing supply and demand

To produce 16 billion gallons of ethanol from cellulosic feedstocks by 2022, the biomass based ethanol industry will undergo significant changes in biomass supply and ethanol demand as compared to the current situation where few commercial facilities are operating. Strategic level decisions such as timings, locations, and capacities of facilities within the system will be critical for the success of the cellulosic based ethanol industry. These decisions will be impacted by biomass availability, production costs, and accessibility to transportation infrastructure. A multi-stage biomass supply chain optimization model was developed to answer these systems level questions. The model minimized the total ethanol production costs throughout the planning period (2012-2022) given the projected changes of biomass supply and ethanol demand. It was assumed that a planning decision should be made each year during the planning period. The decisions include the optimal installation timings, locations, and capacities of building new facilities and/or expanding the existing facilities, as well as the optimal biomass flow patterns between facilities within the system. The results of the optimal supply chain configuration suggest building large biorefineries with the support of many small/medium centralized storage and preprocessing facilities. The average Miscanthus-ethanol production costs are $0.66 L^-1.