Impact of Government Subsidy on Supply Chain for Direct-fired Biomass Based Power Generation

The direct-fired biomass based power generation plays an important role in both rural poverty alleviation through power generation and low-carbon electricity generation, thus to draft a reasonable manner for the government subsidy policy is the key factor to ensure the good development of direct-fired biomass based power generation enterprises. Considering the factor of season influence and taking the maximized profit of power plant as the object, the optimum purchase quantity, the purchasing price and the blending proportion of the purchased biomass fuel are determined. On this basis, the system dynamics method is applied to dynamically simulate the operational process of the biomass supply chain, and the impacts of subsidy manners such as the flat rate subsidy, the linear growth subsidy and the subsidy, which is increased at first and then decreased, on biomass supply chain are analyzed. Analysis results show that the linear growth subsidy manner adopted by the government is more conductive to raise the farmer-households’ willingness of supplying the biomass fuel and to promote the operation of biomass supply chain. Besides, the effect of subsidizing farmer-households’ is better than that of subsidizing biomass power plants.