Developing a decision framework for the strategic sourcing of biomass

Abstract

The deployment of bioenergy technologies is a key part of UK and European renewable energy policy. A key barrier to the deployment of bioenergy technologies is the management of biomass supply chains including the evaluation of suppliers and the contracting of biomass. In the undeveloped biomass for energy market buyers of biomass are faced with three major challenges during the development of new bioenergy projects. What characteristics will a certain supply of biomass have, how to evaluate biomass suppliers and which suppliers to contract with in order to provide a portfolio of suppliers that best satisfies the needs of the project and its stakeholder group whilst also satisfying crisp and non-crisp technological constraints. The problem description is taken from the situation faced by the industrial partner in this research, Express Energy Ltd. This research tackles these three areas separately then combines them to form a decision framework to assist biomass buyers with the strategic sourcing of biomass. The BioSS framework. The BioSS framework consists of three modes which mirror the development stages of bioenergy projects. BioSS.2 mode for early stage development, BioSS.3 mode for financial close stage and BioSS.Op for the operational phase of the project. BioSS is formed of a fuels library, a supplier evaluation module and an order allocation module, a Monte-Carlo analysis module is also included to evaluate the accuracy of the recommended portfolios. In each mode BioSS can recommend which suppliers should be contracted with and how much material should be purchased from each. The recommended blend should have chemical characteristics within the technological constraints of the conversion technology and also best satisfy the stakeholder group. The fuels library is made up from a wide variety of sources and contains around 100 unique descriptions of potential biomass sources that a developer may encounter. The library takes a wide data collection approach and has the aim of allowing for estimates to be made of biomass characteristics without expensive and time consuming testing. The supplier evaluation part of BioSS uses a QFD-AHP method to give importance weightings to 27 different evaluating criteria. The evaluating criteria have been compiled from interviews with stakeholders and policy and position documents and the weightings have been assigned using a mixture of workshops and expert interview. The weighted importance scores allow potential suppliers to better tailor their business offering and provides a robust framework for decision makers to better understand the requirements of the bioenergy project stakeholder groups. The order allocation part of BioSS uses a chance-constrained programming approach to assign orders of material between potential suppliers based on the chemical characteristics of those suppliers and the preference score of those suppliers. The optimisation program finds the portfolio of orders to allocate to suppliers to give the highest performance portfolio in the eyes of the stakeholder group whilst also complying with technological constraints. The technological constraints can be breached if the decision maker requires by setting the constraint as a chance-constraint. This allows a wider range of biomass sources to be procured and allows a greater overall performance to be realised than considering crisp constraints or using deterministic programming approaches. BioSS is demonstrated against two scenarios faced by UK bioenergy developers. The first is a large scale combustion power project, the second a small scale gasification project. The Bioss is applied in each mode for both scenarios and is shown to adapt the solution to the stakeholder group importance and the different constraints of the different conversion technologies whilst finding a globally optimal portfolio for stakeholder satisfaction.