Economic modeling of a hybrid electricity supply chain for sustainable energy storage management

Abstract

In this study an integrated distribution system consisting of a transmission station, power plant and prosumers has been proposed. The electricity demand from the customers is known and assumed to be normally distributed. The transmission station is responsible to deliver the electricity to the end users which is produced by the power plant and prosumer micro grid in parallel. The prosumers are consumers of electricity with the ability to generate their own electricity through renewable electricity generation. The prosumers will first sustain their own in-house demand and then supply electricity to the transmission substation. The electricity demand is assumed to be normally distributed. The cost of electricity production from the traditional power plant is higher than the cost of electricity generation from the prosumers. As the traditional power plant is based on the fossil fuel technology while the prosumer micro grid is using the renewable electricity generation, the generation emissions from the power plant would be greater than that of the prosumer micro grid. Differential calculus is applied to obtain the total cost of each node of the supply chain and a comprehensive joint total cost is obtained from these equations. The objective function isto minimize the total cost of the system that consist of the transmission cost, production cost, inventory holding cost and emissions cost. Continuous review policy is used by the transmission station to fulfill the stochastic demand. An iterative method is developed to solve the problem followed by a comprehensive sensitivity analysis to observe the effects of some key parameters on the proposed model. The results show that the overall cost of the system is highly dependent on the resource allocation factor that influences the production cost and emissions cost. Production capacity also plays a pivotal role in influencing the Joint total cost of the system. The amount of carbon emissions is highly influenced by the production cost parameter for the power plant. As the system is forced to move towards more electricity production from the power plant rather than the prosumer micro grid the joint total cost of the system increases significantly. The total cost of the system can be controlled through optimal resource allocation which would determine the power supply rate for both the power plant and the prosumer micro grid.