Economic trade-offs between internal and external use of excess heat from kraft pulp mills in Sweden

Paper in proceeding, 2008

In Scandinavian kraft pulp mills excess heat can be made available through energy efficiency measures and new technology. This excess heat can be used either internally in the mill processes or externally for e.g. district heating production. This paper analyzes how the economic trade-off between internal and external use of a kraft pulp mill’s excess heat is affected when including excess heat of all qualities (high, medium and low) compared with including only low- and medium-quality excess heat, studied earlier. Furthermore, the paper expands the earlier methodology to address not only the trade-off and potential for profitable excess heat cooperation, but also the question of pricing the excess heat. Associated CO2 emissions are also calculated. The results show that including high-quality excess heat in the analysis does not greatly change the results regarding the trade-off between internal and external use of the excess heat. External use is preferred for all cases with small heat loads and for medium or large heat loads if the CO2 charge and biofuel price are high, and internal use is preferred for all the other cases studied. Further, the results show that the ECO’s willingness to pay varies more with the energy market prices than the mill’s willingness to sell, implying that the ECO holds the largest profit potential in a cooperation regarding industrial excess heat. However, due to the same variation, it also bears the largest risk.