Simplified model of integrated paper mill for optimal bidding in energy and reserve markets

Lars Herre, Federica Tomasini, Kaveh Paridari, Lennart Söder and Lars Nordström

Applied Energy, 2020, vol. 279, issue C, No S0306261920313313

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.

Keywords: Ancillary services; Frequency reserves; Industrial demand response; Optimal bidding; Pulp and paper mill; Stochastic optimization (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.apenergy.2020.115857

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