Supply chains with on-site microgrids and transactive energy

Applied Mathematical Modelling (2023) and IEEE SEGRE 2023, first author; Journal of the Operational Research Society (2022), second author

Microgrids & supply chains
Where should a manufacturing supply chain place its facilities, and how much on-site wind, solar and storage should each facility install when facilities can trade energy with the grid?

First author (AMM, SEGRE)

  • Multi-tier supply chain
  • On-site wind, solar, storage
  • Hourly grid buying and selling
  • 52 weeks of 168 hours
  • Mixed-integer location model

Research question

Where should a manufacturing supply chain place its facilities, and how much on-site wind, solar and storage should each facility install when facilities can trade energy with the grid?

Key insight

With on-site renewables, wind and sun become part of the siting decision

When each facility can install its own wind, solar and storage and trade energy with the grid, a candidate site's renewable resource affects its operating cost. The model then weighs transport cost against resource quality, and storage became worthwhile under high peak prices or capped grid imports.

My contribution

First author of the location-allocation papers (AMM, SEGRE), for which I did most of the work. Second author of the JORS paper, for which I contributed to the optimization models and the case-study analyses.

How I approached it

  1. ChallengeWhere a facility opens decides its wind and solar resource, while transport, production and energy costs depend on the same decisions.

    What I didWith my co-authors, I developed a mixed-integer model that opens factories and warehouses, routes products and sizes each open site's wind, solar and storage, with an hourly energy balance and grid trade.

    Why it matteredSolving these together showed that facility siting trades transport cost against renewable resource quality.

  2. ChallengeWeekly store demand is uncertain, yet the network has to meet it reliably.

    What I didI modeled demand as a chance constraint with a set service level, written as its deterministic equivalent.

    Why it matteredThe model stays a mixed-integer linear program while holding the chance of a stock-out to the chosen level.

Method

JORS sizes on-site microgrids for fixed facility locations with production and inventory planning; AMM and SEGRE add facility location-allocation decisions.

Key findings

  1. Facility siting trades transport cost against renewable resource quality (AMM).
  2. On-site renewables lower total supply-chain cost under the modeled time-of-use tariffs.
  3. In the AMM price scenarios, batteries became attractive at high peak electricity prices; in JORS, capping grid imports made storage worthwhile.

Boundary conditions

Stylized multi-echelon networks with synthetic distances and costs.

Publications

  1. Appl. Math. Model.
    Facility and microgrid location-allocation for integrated supply chain and transactive energy operations
    H. Li, T. Jin, C. Novoa
    Applied Mathematical Modelling, vol. 119, pp. 119–136, 2023.
    DOI Code Cited by 12
  2. SEGRE 2023
    Locating and Allocating Warehouse Facilities and Prosumer Microgrid in Transactive Energy Paradigm
    H. Li, T. Jin, E. Z. Fainman
    2023 International Conference on Smart Electrical Grid and Renewable Energy (SEGRE), pp. 410–415, 2023.
    DOI Code
  3. J. Oper. Res. Soc.
    Supply chain design for transactive energy operations in the nexus of manufacturing, microgrid and climate
    T. Jin, H. Li, S. P. Kumar Prabha
    Journal of the Operational Research Society, vol. 73, pp. 2395–2411, 2022.
    DOI Accepted manuscript (PDF) Cited by 10

Citation counts: Google Scholar, October 30, 2026.