Mekaanisen massan tuotannon ja energiahallinnan optimointi paperitehtaalle, jolla on integroitu CHP-voimalaitos

The pulp and paper industry is facing global competition, where companies are working to lower their production costs. Energy consumption plays an important role in these costs. There is much interest into lowering the electricity costs of mills through demand side management. This Thesis is a case study of a mechanical pulp and paper mill with integrated CHP production. The case site is modeled with focus on the critical dependencies between pulp, paper, and CHP production. The purpose of the model is to analyze the mill’s capacity of demand side management, and the total costs of executing regulating power bids in the mill site. The production scheduling of mechanical mass is studied through a mixed integer linear model. The model is based on the processes of the mill site, considering the balances of steam, electricity, heat, and mechanical mass. Paper production scheduling is not in the scope of the model. The model is utilized to calculate the increase of production costs in case a regulating power trade is made. The model creates an optimal mechanical mass production schedule for a 24 hour period. It is then used to modify that schedule based on a hypothetical regulating power bid that is accepted on the first hour of the modeling period. The cost difference between the resulting two schedules is calculated, denoting the real cost of regulating in that scenario. This analysis is repeated for a number of real periods in terms of electricity price and district heating demand. The model generates realistic production schedules of mechanical mass. Upregulating power trades are found to cause moderate costs, but there is significant variation. It is noted that the co-planning of the mill and power plant plays an important role in the results. Its design allows the model to be used for various purposes in addition to what is presented in this Thesis.Sellu- ja paperiteollisuus on globaalissa kilpailutilanteessa, jossa yritykset pyrkivät alentamaan tuotantokustannuksiaan. Energian kulutuksella on suuri rooli näissä kustannuksissa. Sähköenergiakustannusten alentaminen kulutusjouston avulla herättää paljon kiinnostusta. Tässä diplomityössä esitellään case-tutkimus mekaanista massaa ja paperia valmistavasta tehtaasta, jolla on integroitu CHP-voimalaitos. Kohteena oleva tehdas voimalaitoksineen mallinnetaan, keskittyen tärkeimpiin riippuvuuksiin massan, paperin ja energian tuotantoprosessien välillä. Tavoitteena on analysoida tehdaskokonaisuuden kapasiteettia kulutusjouston tekemiseen sekä säätösähkötarjousten toteuttamisen kustannuksia. Mekaanisen massan valmistuksen aikataulutusta tutkitaan lineaarisen sekalukuoptimointimallin avulla. Malli perustuu tehdaskokonaisuuden prosesseihin, joista huomioidaan taseet höyrylle, sähkölle, lämmölle ja mekaaniselle massalle. Paperintuotannon aikataulutus ei kuulu mallin piiriin. Työssä esitetään, miten mallia voi käyttää säätökaupan aiheuttamien lisäkustannusten laskemiseksi. Mallin avulla luodaan optimaalinen mekaanisen massan tunneittainen tuotantoaikataulu vuorokauden jaksolle. Tätä aikataulua muokataan edelleen mallin avulla kuvitteellisen säätösähkötarjouksen perusteella, joka hyväksytään mallinnusjakson ensimmäisellä tunnilla. Vertaamalla tuloksina saatujen kahden aikataulun kustannuksia voidaan arvioida säädön todellinen kustannus. Tämä analyysi toistetaan useissa eri tilanteissa todellisilla sähkön hinnoilla ja kaukolämmön tarpeilla. Malli tuottaa realistisia aikatauluja mekaanisen massan tuotannolle. Ylössäätökauppojen todetaan aiheuttavan kohtuullisia kustannuksia, mutta vaihtelu on suurta. Huomataan, että paperitehtaan ja voimalaitoksen yhteissuunnittelu on tärkeässä roolissa tuloksissa. Mallin rakenne mahdollistaa sen käyttämisen tässä työssä esitettyjen lisäksi myös muihin tarkoituksiin

The role of natural gas in setting electricity prices in Europe

The EU energy and climate policy revolves around enhancing energy security and affordability, while reducing the environmental impacts of energy use. The European energy transition has been at the centre of debate following the post-pandemic surge in power prices in 2021 and the energy crisis following the 2022 Russia-Ukraine war. Understanding the extent to which electricity prices depend on fossil fuel prices (specifically natural gas) is key to guiding the future of energy policy in Europe. To this end, we quantify the role of fossil-fuelled vs. low-carbon electricity generation in setting wholesale electricity prices in each EU-27 country plus Great Britain (GB) and Norway during 2015-2021. We apply econometric analysis and use sub/hourly power system data to estimate the marginal share of each electricity generation type. The results show that fossil fuel-based power plants set electricity prices in Europe at approximately 58% of the time (natural gas 39%) while generating only 34% of electricity (natural gas 18%) a year. The energy transition has made natural gas the main electricity price setter in Europe, with gas determining electricity prices for more than 80% of the hours in 2021 in several countries such as Belgium, GB, Greece, Italy, and the Netherlands. Hence, Europe’s electricity markets are highly exposed to the geopolitical risk of gas supply and natural gas price volatility, and the economic risk of currency exchange

Energiamurroksen vaikutukset ja mahdollisuudet pohjoismaisilla sähkö- ja kaukolämpömarkkinoilla

An ongoing period of low electricity market price has a negative impact on the profitability of many forms of electricity and heat production in the Nordic energy system. As the share of variable renewable energy increases and climate goals become more stringent, there is worry over how the heating and electricity sectors will adapt to new demands. This dissertation discusses the integration of the heat and electricity sectors for additional flexibility and efficiency in both. We take a market-based view on the integration because it is realised and maintained only if the necessary investment is profitable. We discuss three aspects of sector integration: industrial demand-side management (IDSM), combined heat and power (CHP) production, and large-scale heat pumps (LHPs). The economic IDSM capacity of a case pulp and paper mill differs significantly from the technical capacity due to the costs and risks of demand response actions. Owing to these, the technical capacity may be only partially utilised. The economy of the future use of CHP and LHPs in Nordic district heating has links to the overall electricity demand and electricity production capacities. The use of these technologies improves the efficiency of the energy system when compared with current competing technologies. Model results indicate continuous potential for the use of both past the year 2030, if electricity demand grows according to national forecasts. While we find economic potential for sector integration in all studied cases, there are limits and conditions for them, including the market price of electricity, as well as regulations and taxation. Research and policymaking aiming for increased sector integration should consider the market-based and international operation of the energy business. This will allow the holistic understanding of investment potential in sector integration beyond theoretical feasibility.Meneillään oleva alhaisen sähkön markkinahinnan kausi haittaa useiden sähkön- ja lämmöntuotantomuotojen kannattavuutta. Samalla kun vaihtelevan uusiutuvan sähköntuotannon osuus kasvaa ja ilmastotavoitteet tiukkenevat, sähkö- ja lämpösektoreiden sopeutuminen uusiin vaatimuksiin aiheuttaa huolta. Tässä väitöskirjassa tarkastellaan lämpö- ja sähkösektoreiden välistä integraatiota joustavuuden ja tehokkuuden parantamiseksi molemmissa. Otamme markkinalähtöisen näkökulman integraatioon, koska se toteutuu ja säilyy vain, jos tarvittavat investoinnit ovat taloudellisesti kannattavia. Tarkastelemme kolmea sektoreiden välisen integraation osa-aluetta: teollinen kysyntäjousto, sähkön ja lämmön yhteistuotanto sekä suuret lämpöpumput. Tarkastellun sellu- ja paperitehtaan teollisen kysyntäjouston taloudellinen kapasiteetti eroaa huomattavasti sen teknisestä kapasiteetista kysyntäjoustotoimien kustannusten ja riskien vuoksi. Näiden takia vain osa teknisestä kapasiteetista voitaneen hyödyntää. Yhteistuotannon ja suurten lämpöpumppujen käyttö pohjoismaisessa kaukolämmöntuotannossa riippuu osittain kokonaiskehityksestä sähkönkulutuksessa ja sähköntuotantokapasiteeteissa. Kyseisten teknologioiden käyttö parantaa energiajärjestelmän tehokkuutta verrattuna kilpaileviin nykyteknologioihin. Mallinnustulosten perusteella molempien käytölle on jatkuvat edellytykset yli vuoden 2030, jos sähkön kysyntä kehittyy kansallisten ennusteiden mukaisesti. Vaikka näemme taloudellista potentiaalia sektoreiden yhdistämiselle kaikissa tarkastelluissa tapauksissa, niille on rajoituksia ja ehtoja, joiden tulisi täyttyä, liittyen esimerkiksi sähkön markkinahintaan, säännöksiin ja verotukseen. Sektoreiden integraatioon tähtäävässä tutkimuksessa ja poliittisessa työssä tulisi huomioida energialiiketoiminnan markkinalähtöisyys ja kansainvälisyys. Tämä mahdollistaa teoreettista kelpoisuutta syvemmän ymmärryksen investointipotentiaalista sektori-integraatiossa

Is District Heating Combined Heat and Power at Risk in the Nordic Area?—An Electricity Market Perspective

The Nordic power market has exceptionally low carbon emissions. Energy efficient combined heat and power (CHP) plays an important role in the market, and also produces a large share of Nordic district heating (DH) energy. In future Nordic energy systems, DH CHP is often seen as vital for flexibility in electricity production. However, CHP electricity production may not be profitable in the future Nordic market. Even currently, the prevailing trend is for CHP plants to be replaced with heat-only boilers in DH production. In this work, we aim to describe the future utilisation of CHP in the Nordic area. We use an electricity market simulation model to examine the development of the Nordic electricity market until 2030. We examine one main projection of electricity production capacity changes, and based on it we assess scenarios with different electricity demands and CO2 emission prices. Differences between scenarios are notable: For example, the stalling or increasing of electricity demand from the 2014 level can mean a difference of 15 €/MWh in the average market price of electricity in 2020. The results of this paper underline the importance of considering several alternative future paths of electricity production and consumption when designing new energy policies.Peer reviewe

Energy security impacts of decreasing CHP capacity in Finland

Finland, as part of the Nordic electricity market, is experiencing an era of low electricity market prices. This has practically removed all condensing power capacity from the electricity market. The Finnish combined heat and power (CHP) capacity is facing a similar trend. Some industry experts argue that the described trend could induce serious energy security issues. In this paper, we analyse a scenario where the average electricity spot price remains under 30 /MWh throughout the 2020s and energy use of coal is phased out by 2030, resulting in a notable decrease in CHP capacity. We assess the energy security implications in the scenario on a national and multi-national level. Additionally, we present a case study of Helsinki to give examples of the identified energy security issues on a city level. The results provide policy makers insight in decision making regarding the operating environment of CHP production in Finland.Peer reviewe

Improving district heat sustainability and competitiveness with heat pumps in the future Nordic energy system

District heating (DH) in Nordic countries largely relies on efficient large-scale combined heat and power (CHP) production. The currently low electricity market price has diminished the economic competitiveness of CHP production. Production of DH increasingly happens in thermal heat-only boilers, increasing long-term environmental impacts. An alternative is the use of large-scale heat pumps (LHPs). Utilization of LHPs in hours of low electricity price could be economically advantageous to producers, reduce carbon emissions from burning fuels, and aid in balancing the production and consumption of electricity in a future energy system where electricity production from variable renewable energy is increasing rapidly.Peer reviewe

Improving district heat sustainability and competitiveness with heat pumps in the future Nordic energy system

District heating (DH) in Nordic countries largely relies on efficient large-scale combined heat and power (CHP) production. The currently low electricity market price has diminished the economic competitiveness of CHP production. Production of DH increasingly happens in thermal heat-only boilers, increasing long-term environmental impacts. An alternative is the use of large-scale heat pumps (LHPs). Utilization of LHPs in hours of low electricity price could be economically advantageous to producers, reduce carbon emissions from burning fuels, and aid in balancing the production and consumption of electricity in a future energy system where electricity production from variable renewable energy is increasing rapidly.Peer reviewe

The role of natural gas in setting electricity prices in Europe

The EU energy and climate policy revolves around enhancing energy security and affordability, while reducing the environmental impacts of energy use. The European energy transition has been at the centre of debate following the post-pandemic surge in power prices in 2021 and the energy crisis following the 2022 Russia-Ukraine war. Understanding the extent to which electricity prices depend on fossil fuel prices (specifically natural gas) is key to guiding the future of energy policy in Europe. To this end, we quantify the role of fossil-fuelled vs. low-carbon electricity generation in setting wholesale electricity prices in each EU-27 country plus Great Britain (GB) and Norway during 2015-2021. We apply econometric analysis and use sub/hourly power system data to estimate the marginal share of each electricity generation type. The results show that fossil fuel-based power plants set electricity prices in Europe at approximately 58% of the time (natural gas 39%) while generating only 34% of electricity (natural gas 18%) a year. The energy transition has made natural gas the main electricity price setter in Europe, with gas determining electricity prices for more than 80% of the hours in 2021 in several countries such as Belgium, GB, Greece, Italy, and the Netherlands. Hence, Europe’s electricity markets are highly exposed to the geopolitical risk of gas supply and natural gas price volatility, and the economic risk of currency exchange