Dynamic programming of capacity expansion of reverse osmosis desalination plant case study: Sharm El Sheikh, Egypt

Hotels in arid coastal areas use mainly desalinated water for their domestic water demand, and treated wastewater for irrigating green areas. Private water companies supply these hotels with their domestic water needs. There is normally a contractual agreement stating a minimum requirement that has to be supplied by the water company and that the hotel management has to pay for regardless of its actual consumption (“contracted-for water supply”). With a reverse osmosis (RO) desalination plant designed to satisfy only the contracted-for water supply, the water company would be missing out on potential benefits that could have been obtained selling water in periods of high demands. On the other hand, sizing the RO desalination plant to produce water to satisfy peak demand means incurring additional costs as well as having the plant partially idle during periods of average or low demand. A model was developed using Excel macros to perform dynamic optimization with the objective function to maximize the present value of total benefits over the lifetime of the RO desalination plant. The aim of the dynamic optimization is to solve for capacity expansion. The model can be used to test different scenarios to capture time-variant tourism demand and price uncertainties on investment decisions. Unit production cost of RO desalination plants varies according to the degree of operation of the plant. This fact has to be taken into consideration when calculating the costs of RO desalination and when deciding on plant capacity in order to maximize the total net benefits.