1. Economic potential of industrial demand side management in pulp and paper industry
- Author
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Risto Lahdelma, Behnam Zakeri, Kristo Helin, Anssi Käki, and Sanna Syri
- Subjects
Marginal cost ,Spot contract ,020209 energy ,02 engineering and technology ,Demand side management ,Industrial and Manufacturing Engineering ,Regulating power market ,Microeconomics ,Variable renewable energy ,020401 chemical engineering ,Production schedule ,0202 electrical engineering, electronic engineering, information engineering ,Economics ,Mill ,Price volatility ,0204 chemical engineering ,Electrical and Electronic Engineering ,Mechanical pulp production ,ta512 ,ta218 ,Economic potential ,Civil and Structural Engineering ,ta113 ,Flexibility (engineering) ,Demand side ,ta214 ,Mechanical Engineering ,Building and Construction ,Environmental economics ,Pollution ,Flexible demand ,General Energy - Abstract
Increasing levels of variable renewable energy require additional flexible resources in the global energy system. In countries with energy-intensive industries, flexibility may be increased through industrial demand side management (IDSM). In most studies, the potential of IDSM is estimated from a technical or theoretical viewpoint. However, IDSM capacity is only utilized if the industry finds it profitable, and thus the economic potential should also be assessed. The focus of this paper is on the intra-day IDSM potential of a paper mill site that is active in the Nordic power market. An optimization model is built to estimate the costs that occur when the paper mill executes regulating power bids, if the original production schedule has been optimized against a spot price forecast. The costs are estimated for different sizes of bids and a marginal cost curve is provided for pricing them. Using this marginal cost curve, the market potential of the case mill site is assessed. It is found that this potential is greatly influenced by the costs of executing regulating power bids. The results indicate that transmission system operators and policy makers should account for economic factors when assessing the potential of market based IDSM.
- Published
- 2017