A two-phase stochastic programming approach to biomass supply planning for combined heat and power plants

Due to the new carbon neutral policies, many district heating operators start operating their combined heat and power plants using diferent types of biomass instead of fossil fuel. The contracts with the biomass suppliers are negotiated months inadvance and involve many uncertainties from the energy producer’s side. The
demand for biomass is uncertain at that time, and heat demand and electricity prices vary drastically during the planning period. Furthermore, the optimal operation of combined heat and power plants has to consider the existing synergies between the power and heating systems. We propose a solution method using stochastic optimization to support the biomass supply planning for combined heat and power plants. Our two-phase approach determines mid-term decisions about biomass supply contracts as well as short-term decisions regarding the optimal production of the producer to ensure proftability and feasibility. We present results based on ten realistic test cases placed in two municipalities.