Using inventory as energy storage for demand-side management of manufacturing operations

Abstract

Traditionally, electrical grids were designed to have unidirectional flow of power and related services from the utility to the end-user. Modern grids are now tasked with bi-directional flow of power and information. To capitalize on this reality, utilities have designed programs that financially incentivize energy consumers to adjust their energy profile in such a way that is advantageous to the utility. At the same time, users seek to maximize the benefits offered by the utilities. Since this is a complex decision-making process, particularly as users continue to adopt energy storage, solar photovoltaics, and other distributed energy resources, the need for decision support tools is increasingly important. To maximize the financial incentive received by the user, and the benefit gained by the utility, this paper proposes an optimization model to aid manufacturers in operating a battery energy storage device while also using product inventory as additional energy storage. Using inventory as additional energy storage is accomplished by scheduling production to build buffers of inventory during low electricity cost times so that production may be reduced during high electricity cost times. We refer to this problem as the energy job-shop scheduling problem (EJSSP). To accomplish these efforts, a deterministic optimization model is developed in order to determine optimal production and energy storage schedules. It is shown that under the proper conditions, utilities can work directly with energy users such that both parties stand to gain from cooperation with one another. Using several synthetic scenarios, it is found that more flexible manufacturing configurations can have as high as 25% more relative energy cost savings when compared to their more rigid counterparts. Moreover, production scheduling allows inventory to be effectively used as energy storage. Ultimately, the methodology forms the foundation of a gateway for electric utilities and their customers to align their interests and act cooperatively.