Mapping the cost risk of agricultural residue supply for energy application in rural China

This research aims to shed light on the interaction mechanism of cost risks for biomass material supply in power generation, especially for biomass-coal dual-fuel systems. Firstly, a game model is established to analyze interactions among factors including unit procurement cost, unit transportation cost, basic price and coal price for crop residue collection. Secondly, a Monte Carlo simulation is implemented to compare the profit increase under material competition with that under price alliance. The methodology is illustrated with a case study in a biomass power plant in Shandong Province, China. It shows that developing a price alliance will benefit both the allied enterprises and the local collection area in most circumstances. Thirdly, a risk tolerance area approach is applied in mapping the cost risk and in explaining the risky circumstances of the case study.