Locating and Designing a Biorefinery Supply Chain under Uncertainty in Navarre: A Stochastic Facility Location Problem Case

Abstract

The need for renewable energy sources is quickly growing in order to reduce the greenhouse gas emissions. Moreover, Navarre, a European region located in Northern Spain is, currently, a global leader in the production and use of renewable energy. Actually, more than 80% of its electricity production comes from renewable sources (mainly wind and water). Then, having the purpose of increasing the renewable energy sources diversification, the region aims to locate a biorefinery plant which mainly serves Northern Spain. Locating decisions are considered strategic, immobilizing a large amount of resources and involving an important group of industrial actors. Therefore, they initially show a significant impact on investment costs, and later, on the operating costs when the facility is already running. This location activity has also important environmental influence due to the usual performance of the biorefinery, involving also the transportation and logistic activities because of the supply chain procurement. Once the biorefinery has been located, another problem arises: the design of the supply chain with its classical operational decisions: which crops are going to be harvested, when they are going to be collected and how we should transport the feedstock to the biorefinery. Apart from this, dealing with farms production is always dealing with uncertainty. Thus, climate and weather, competitors and alternate uses, are key factors which influence the availability of biomass. For that reason, uncertainty must be taken into account in order to avoid stockouts that allow us the optimization of the total expected cost. Moreover, estimated feedstock availability is crucial to determine the optimal plant size. Therefore, the results provide us not only the best location of the biorefinery from the economic point of view, but also the variation on feedstock disposal that eventually the biorefinery could intake along with its final size.