ROBUST LOCATION PLANNING OPTIMIZATION MODEL FOR ENERGY AND ENVIRONMENTAL SUSTAINABILITY

Abstract

We consider an expansion planning problem for Waste-to-Energy (WtE) systems facing uncertainty in future waste supplies. The WtE expansion plans are regarded as strategic, long term decisions, while the waste distribution and treatment are medium to short term operational decisions, able to adapt to the actual waste collected. We propose a prediction set uncertainty model which integrates a set of waste generation forecasts constructed based on user-specified levels of forecasting errors. We use these prediction sets for our WtE expansion analysis and show that the problem of optimizing the guaranteed NPV by searching over the set of all feasible expansion scenarios can be solved by an exact cutting plane approach. We also propose a heuristic based on a constant proportion distribution rule for this optimization model. Finally, our computational studies demonstrate that our proposed expansion model solutions are very stable and competitive in performance compared to scenario tree approaches.