Integrated Investment and Operational Planning for Sugarcane-Based Biofuels and Bioelectricity under Market Uncertainty

Abstract

Sugarcane biomass is a strategic resource for the energy transition, particularly in Brazil, where it underpins electricity and ethanol production. Investment planning is challenged by diverse production pathways, price volatility, and feedstock variability. This work develops a two-stage stochastic optimization model integrating investment and operational decisions for sugarcane facilities. The model aims to support robust planning for diversified biomass plants, aiding the sector's decarbonization. The first stage defines capacity expansion under economies of scale through a power-law cost function. The second stage defines operational decisions under price and feedstock uncertainty, modeled via scenarios and Conditional Value-at-Risk. \answer{From an investor's perspective, the objective is to minimize risk-adjusted net costs. In addition to its methodological contributions, this work also provides an open-source implementation of the proposed capacity expansion planning framework, referred to as \textit{OptBio}.} A Brazilian case study shows risk-neutral strategies favor sugar/ethanol but are vulnerable, whereas risk-averse strategies promote diversification. Sensitivity analyses indicate biomethane and hydrogen may become viable with favorable prices, while biochar boost productivity and profitability.