Abstract
Due to the increased use of variable renewable energy sources, more capacity for reserves is required. Non-generating resources such as large industrial consumers can arbitrage energy prices and provide reserve capacity by exploiting the inherent flexibility in selected industrial processes. A large enough industrial consumer can capitalize on this flexibility through optimized bidding in electricity markets. In this work, the day-ahead cost minimization of a risk-averse pulp and paper mill is formulated as a two-stage stochastic problem, considering thermodynamic and electrical constraints. The bids in the energy and reserve markets are jointly optimized subject to price uncertainty as well as uncertainty of frequency realization. The results of a case study in Sweden display a significant economic benefit in exploiting the flexibility of integrated pulp and paper mills with electric boilers. The expected cost of the pulp and paper mill resulting from different strategies are compared and the risk-aversion of the pulp and paper mill is investigated. Reserve offers are mainly facilitated by fast-acting electric boilers and supported by flexibility in the steam network. We show that reserve offers can significantly improve the profitability of the pulp and paper mill.
Highlights
Market participation of the pulp and paper mill In this paper, we examine a PPM that participates in the DA energy spot market and Frequency containment reserve in normal operation (FCR-N) market, and – being a Balance Responsible Parties (BRPs) – implicitly in the imbalance settlement
A simplified model of a risk-averse integrated pulp and paper mill is developed for optimal day-ahead bidding in electricity and reserve markets under uncertainty
We find that the steam accumulator is not essential for flexibility, reserve offers, or cost savings and, plays a minor role in the high level day-ahead optimization of the mill operator
Summary
The Nordic system operators recognize in Demand Response (DR) one of the most promising solutions to the current challenges that the power system is facing [1]. In Sweden, around 4.5 GW of flexible demand was identified in [2], whereof 51% comes from the industrial sector. Energy intensive industries are expected to play a dominant role. They are the ones that could contribute with the greatest capacity, and they are the ones that would experience a higher economic benefit since they are the most affected by electricity cost variations [3]. The pulp and paper industry has developed eminently in countries with vast forests. The Nordic countries Sweden and Finland have the highest per capita production of paper and cardboard among the top 20, which makes the pulp and paper industry an important export sector
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