Energy Supply Chain Resilience and Sustainability Practices: Insights on Sourcing and Pricing Strategies

The energy supply chain is critical for meeting the increasing global energy demand. However, disruptions in the energy supply chain can have dramatic effects on various stakeholders, including manufacturers, consumers, and the environment. This study proposes a game-theoretic model integrating renewable and fossil fuel power plants to increase supply chain resilience. The manufacturer benefits from a renewable power plant as the main supplier and a fossil fuel power plant as backup. Two sourcing strategies are considered dependent based on disruption probability: (1) single sourcing from renewable power plant, and (2) dual sourcing from both renewable and fossil fuel power plants. Given the uncertain environment of the energy supply chain, a game theoretic approach provides the appropriate framework to analyze the strategic interactions between different players in a complex system, such as the interactions between the renewable and fossil fuel power plants and the manufacturer in this study. Based on the two sourcing options, we analyzed the strategic scope for different levels of collaboration between power plants, capturing interactions, ordering decisions, and pricing strategies. This study contributes to the literature, particularly in the areas of resilience and sustainability of the energy supply chain. By proposing a novel energy supply chain model that integrates renewable and fossil fuel power plants, considering different sourcing strategies and collaboration scenarios, and analyzing the decision-making process from a game-theoretic perspective, this study offers insights into how to overcome energy supply risk by supply chain design and collaboration.