Determination of Optimal Subsidies for Balancing Local Supply/Demand of Biomass Products Within a Regional Development Strategic Plan

Under the assumption that energy crop farmers believe the price in the previous period will prevail in the current period as well, adjusting their cultivation species accordingly, the biomass market may exhibit instability. In the present work, optimal subsidy Iopt is determined for balancing local supply/demand of biomass products for avoiding such instability while ensuring adequacy of biomass inventory for feeding continuously a biomass processing unit. The Iopt model is implemented for parameter values referring to Greek biomass­to­energy market, which appears to be a developing sector although the economy (as a whole) is in recession during the last two years. It is also shown that optimization of the subsidy required to balance local supply/demand of biomass products depends on capacity optimization of the biomass processing plant under consideration, within a strategic plan for regional development that should put emphasis on (i) the improvement of the rural roads network to minimize transportation costs and (ii) the diffusion of information about conditions recommended for biomass storing in open air to avoid enzymatic hydrolysis which deteriorates the quality of raw material and decreases the efficiency of the processing unit.