Abstract
ABSTRACT This paper aims to design and integrate virtual power plant (VPP) into a geographically dispersed production-distribution network for attaining environmental sustainability goal. The VPP is comprised wind turbines, photovoltaics, combined heat and power, and energy storage units. The proposed VPP-based supply chain design model makes strategic allocations on renewable capacity as well as scheduling production, inventory, transportation, and energy generation and trading decisions. The model represents a first-of-its-kind in planning a multi-layer supply chain network in which renewable-based electric-thermal cogeneration is coordinated in production-climate nexus. The study yields the following findings. First, products with larger energy use opt to be made in locations with stronger sunshine or wind profile despite higher transportation costs. Second, the time-of-use rate greatly stimulates the installation of onsite photovoltaics and energy storage. Third, under flat utility rate, reducing energy storage cost has limited benefit to the cost savings of the supply chain operations.
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