Designing energy and water supply chains for prosperity
Creators: name: Mun, Kwon Gi
Publisher: name: No Publisher Supplied
Year: 2016

description: Many developing countries suffer severe energy deficiencies despite their ample reserves of energy resources, - the so-called predicament of “resource rich, energy poor.” A leading driver is the energy-economy cycle, where the poor economic status, inefficient utilization of limited budget, and energy deficiency reinforced each other and have led these countries into a spiral of economic downfall. How to turn this cycle around? It is a classic question but not well answered in the energy policy/economics literature and barely studied in the operations management literature.    In Essay 1, we introduce the general concept of energy supply chains and provide a detailed literature review on related studies. The concept applies to any country blessed by natural resources but lack of electricity supply.    In Essay 2, we develop a new class of mathematical models to build up coal-based energy supply chains gradually over time to resolve the paradox of ``resource rich, energy poor". Specially, we provide a mathematical approach to design cost effective energy supply chains taking into account the interaction between economy and budgets and various types of constraints arisen in fuel production, fuel transportation, power generation and transmission, and consumption. We verify the effectiveness of the approach by real life instances in some of the energy poor countries.    In Essay 3, we study the nexus of water, food, energy and flood, which are among the most formidable challenges faced by developing countries around the world (Food and Agriculture Organization of the United Nations 2014). The development of hydropower has the potential to address all these issues in the same time and thus is prioritized in the international community to reduce poverty, promote the sustainable development of the economy, and achieve the Millennium Development Goals.    In this Essay, we apply the supply chain management concept to water resource development and provide the end-to-end and dynamic perspectives (the supply chain perspectives) needed in the expansion of hydropower network for energy security, irrigation and flood control. We identify the unique features and economies of hydropower systems in developing countries and construct a new class of mathematical models to capture the nexus of these issues, explore the synergy among different development goals and maximize the overall benefit. The model links the hydropower location decisions with the distribution decisions of power and water, incorporates conflicting requirements of different sectors, and capture a new set of cost and time trade-offs on a complex, interacting and dynamic network. Applying the model to the real-life situation of Pakistan, we develop new solutions that can significantly outperform common practices in economic prosperity. Our results demonstrate the value of the supply chain perspectives in hydropower network expansion, and provide insights on the relative performance among popular practices, such as, concentrated vs. dispersed hydropower locations, many small vs. a few large hydropower sites, and various strategies on the mix and sequence of sites with different types and capacities.