Desalination as a power reliability service: An economic framework for the energy–water nexus

Energy and water systems are increasingly intertwined, particularly in regions where desalination represents a major, flexible load. As the share of renewable energy increases, additional system flexibility becomes essential, and the desalination sector can provide part of this flexibility through adaptive operation and water storage. This paper develops an economic, game-theoretic framework for energy–water coordination that models a power service provider as a leader setting time-varying prices and desalination plants as followers optimizing desalination and storage decisions. Under standard convexity and monotonicity conditions, the game admits an equilibrium that is unique, predictable, and welfare-improving relative to uncoordinated operation under the modeled conditions. The equilibrium is computed through reformulation to a Mathematical Program with Equilibrium Constraints (MPEC), yielding a transparent, auditable optimization solvable with off-the-shelf tools. Analytical results show that the framework reproduces much of the efficiency of centralized co-optimization without requiring direct load control. Application to a Saudi Arabia case study, the world’s largest desalination market, demonstrates the mechanism’s practical value. Across 0 %, 25 %, and a high renewable penetration stress-test scenario where solar generation offsets up to 75 % of system demand at midday, desalination behaves as a power reliability service: available reserve coverage expands from an analytical threshold of 1 % to up to 5% of system load while total operating cost remains effectively unchanged, confirming that desalination flexibility enhances reliability at negligible additional modeled system cost. The findings offer a replicable blueprint for integrating other storage-like flexible loads in high-renewable systems.