Optimization of Investments for Strategic Process Integration and Pulp Mill Biorefinery Projects under Uncertainty
Doktorsavhandling, 2012

Energy-intensive industrial plants operate in a changing, uncertain environment. Long-term changes are expected in energy prices, political regulations and technology development. Pulp and paper companies, like many other industries, are under strong pressure to respond to these changes. At the same time, there are many opportunities connected to the changing conditions for these companies thanks to their control and experience of the wood biomass resource. These opportunities include the production of green electricity, wood fuels, and district heating, as well as emerging biorefinery products such as green transportation fuels, chemicals and biomaterials. However, uncertainty regarding future energy market conditions and the development of emerging biorefinery processes inevitably makes the decision between competing technologies difficult. Process integration is a requirement for the successful implementation of pulp mill biorefinery concepts. This thesis presents a systematic methodology for the optimization of investments in process integration under energy market and technology uncertainty with applications to strategic pulp mill biorefinery projects. The methodology is based on multistage stochastic programming and allows for investments at multiple points in time. Decisions are modelled to be made before knowing the outcome of the future energy market development; thereby incorporating the energy market uncertainties explicitly in the optimization model. The investment plan that maximizes the expected net present value can then be obtained given the assumed probabilities of the different energy market developments. Scenarios are also proposed for the analysis of different investment cost developments of emerging pulp mill biorefinery technologies. As illustrated in this thesis, change, flexibility and lock-in effects are strongly connected. The proposed models capture, among other things, the value of the flexibility needed to avoid future lock-in situations; a value which, as shown, can be significant. The thesis also discusses the flexibility lost due to long lead times. The case studies show that for many mills there is traditional technology available that should be invested in today. Some of today’s investment opportunities will, however, lead to lock-in effects if implemented. It is therefore important to evaluate both current and future investment projects in the same optimization model, thereby enabling the identification of the investments that can be cost-effectively implemented today while retaining the opportunity for more far-reaching, future projects. The methodology proposed in this thesis, which is used to identify the investments that are optimal under uncertainty, can thus yield an improved understanding of how investments made today affect later investment opportunities in a long-term perspective.

pulp and paper industry

investment planning

biorefinery

scenario-based modelling.

stochastic programming

Process integration

Euler, Skeppsgränd 3, Chalmers tekniska högskola
Opponent: Professor Paul Stuart, Department of Chemical Engineering, École Polytechnique, Montréal, Canada.

Författare

Elin Svensson

Industriella energisystem och -tekniker

Using Optimization under Uncertainty to Study Different Aspects of Process Integration Investment Decisions – The Example of Lock-in Effects

Proceedings of ECOS 2010 - the 23rd International Conference on Efficiency, Cost, Optimization, Simulation and Environmental Impact of Energy Systems, Lausanne, Switzerland, 14-17 June 2010,; Vol. I (Thermodynamics)(2010)p. 233-240

Paper i proceeding

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

Renewable Energy,; Vol. 61(2014)p. 12-16

Artikel i vetenskaplig tidskrift

A model for optimization of process integration investments under uncertainty

Energy,; Vol. 36(2011)p. 2733-2746

Artikel i vetenskaplig tidskrift

An optimization methodology for identifying robust process integration investments under uncertainty

Energy Policy,; Vol. 37(2009)p. 680-685

Artikel i vetenskaplig tidskrift

I den här avhandlingen beskrivs en metod för att optimera investeringar i industriella energieffektiviseringsprojekt med hänsyn till de stora osäkerheter som finns i bl.a. framtida energipriser. Metoden erbjuder beslutsfattare i industrin ett bättre beslutsunderlag för sådana projekt genom att utvärdera olika teknikval, omfattningar av energibesparingar och tidpunkter för implementering. Avhandlingen presenterar ett antal fallstudier av massabruk. I massa- och pappersindustrin finns det stora möjligheter att effektivisera användandet av energi och biomassa, vilket skulle kunna bidra till minskade CO2-utsläpp och ett effektivare utnyttjande av förnybara resurser i samhället. Fallstudierna visar att det ofta finns beprövade tekniska lösningar för en effektivare användning av energi och biomassa som borde investeras i redan idag. En del av dessa kommer dock, om de implementeras, att leda till inlåsningseffekter, d.v.s. kraftigt fördyra senare, mer omfattande åtgärder. Detta visar vikten av en samlad utvärdering av nuvarande och framtida investeringar för att kunna identifiera de åtgärder som ger lönsamhet idag samtidigt som möjligheten till framtida, mer genomgripande åtgärder bibehålls.

This thesis describes a methodology for optimizing investments in industrial energy efficiency projects considering the great uncertainty of, e.g., future energy prices. The proposed approach offers decision-makers in industry a decision support for these kinds of projects by evaluating the technological alternatives, the extent of the energy savings and the timing of implementation. The thesis presents a number of case studies of pulp mills. There is a great potential for a more efficient use of energy and biomass in the pulp and paper industry. This could contribute to reduced CO2 emissions and to a more efficient utilization of renewable resources in society. The case studies show that, many times, there are well-proven technological solutions for a more efficient use of energy and biomass that should be invested in today. Some of these will, however, if implemented, lead to lock-in effects, as they significantly increase the costs of later, more far-reaching measures. It is therefore important to perform a combined evaluation of current and future investments in order to identify the energy-efficiency measures that are profitable today and yet retain the opportunities for future, more ambitious projects.

Drivkrafter

Hållbar utveckling

Ämneskategorier

Energiteknik

Beräkningsmatematik

Pappers-, massa- och fiberteknik

Företagsekonomi

Styrkeområden

Energi

ISBN

978-91-7385-699-7

Doktorsavhandlingar vid Chalmers tekniska högskola. Ny serie: 3380

Publication - Department of Heat & Power Technology, Chalmers University of Technology: 2012:2

Euler, Skeppsgränd 3, Chalmers tekniska högskola

Opponent: Professor Paul Stuart, Department of Chemical Engineering, École Polytechnique, Montréal, Canada.

Mer information

Skapat

2017-10-08