Assessing the value of a diversified by-product portfolio to allow for increased production flexibility in pulp mills

Abstract

Abstract This paper presents a model for design optimization of pulp mill steam utility systems subject to variations in energy prices and steam demands. A Scandinavian Kraft pulp mill is used as case study to investigate investment opportunities in lignin extraction and new turbines. The model enables solutions to be identified that are more flexible than the solutions that would have been identified with a corresponding model using, for example, annual average values for key input data. The results from the case study show that lignin extraction has a potential to contribute to flexibility in pulp mill electric power production under certain conditions provided that the mill invests in both lignin extraction and condensing turbine capacity. However, the potential electric power production flexibility will vary over time. In the studied mill, with a capacity increased to around 1.3 million tonnes/a of pulp, it is estimated to vary between 15 and 30 MW. Furthermore, investment in new condensing turbine capacity only seems to be attractive if electricity prices that are considerably higher than the spot prices of recent years are assumed. Such prices may occur if there is a clear value of tradable electricity certificates or if future electricity prices rise significantly.