A discretized approach for solving for the optimal capacity and profit maximization level for a biomass refinery given supplemental sources of fuel
The feasibility of a cotton gin that produces bio-fuels is explored. By utilizing cotton gin trash and supplemental feedstock such as rangeland grass, enough megawatt hours of energy can be produced to satisfy peak and sub-peak energy for power plan requirements. Furthermore, findings have confirmed that the amount of carbon displaced by a power plant relying on biomass energy as source of electricity rather than traditional coal is an additional offset that makes the business model even more appealing. For reasons stemming mainly from the availability of cotton gin trash in the Lubbock area, it has been confirmed that use of biomass already on site at agri-forestry processing centers to manufacture bio-products will also minimize transportation and handling costs. Therefore, at the core of this study is the determination of whether an operator of a power plant chooses to import supplemental biomass in the form of rangeland grass for the production of electricity when there is insufficient cotton gin waste due to a bad season. The decision is based on whether the profits derived from the additional megawatt hours from additional biomass are enough to offset the transportation and harvest costs associated with the imported biomass. A profit maximization model simulating the production and sale of biomass electricity suggests that while lowering the transportation and harvest costs through subsidies does influence an operator’s decision to import, it has a negligible effect on the plant capacity and efficiency. Furthermore, findings in this study suggest that a subsidy applied to the peak and sub-peak prices of megawatt hour prices do in fact have a substantial affect on the capacity and profitability of a plant producing electricity from biomass.