The effect of long lead times for planning of energy efficiency and biorefinery technologies at a pulp mill

Journal article, 2014

The pulp and paper industry has many promising opportunities in the biorefinery field. To reach this potential, investments are required in new, emerging technologies and systems solutions which cannot be quickly implemented. In this paper, an approach to model the necessarily long planning times for this kind of investments is presented. The methodology used is based on stochastic programming, and all investments are optimized under uncertain energy market conditions. The uncertain cost development of the emerging technologies is also considered. It is analyzed using scenario analysis where both the cost levels and the timing for market introduction are considered. The effect of long lead times is studied by assuming that no investments can be decided on now and implemented already today, and only investments planned for today can be implemented in, for example, five years. An example is presented to illustrate the usefulness of the proposed approach. The example includes the possibility of future investment in lignin separation, and shows how the investment planning of industrial energy efficiency investments can be guided by using the proposed systematic approach. The example also illustrates the value of keeping flexibility in the investment planning.