The COVID-19 pandemic is causing widespread concern across all sectors of the economy, and the paper, pulp and wood industry is no exception. The lockdown has changed consumer spending patterns, making it more likely for people to stockpile tissue and hygiene products, whereas the demand for other items, such as building materials and office supplies is uncertain.
Due to fluctuating demand and disruptions to the supply chain caused by social distancing and workforce furloughs, as well as the potential for future changes to fiscal policies as the government facilitates the economic bounce-back, businesses will require careful navigation and planning.
PricewaterhouseCoopers has advised paper, pulp and wood businesses to prepare for prolonged recovery, as it is likely that some suppliers and vendors will be facing months of operational and financial difficulties. To mitigate the impact of supply chain disruptions, experts urge businesses to generate savings wherever possible and “to prioritise establishing tactical cash and working-capital framework designed to absorb commercial shocks”.
With energy costs constituting around a third of all paper production costs, there has never been a better time for businesses to review their current energy strategy and look for new opportunities in the energy markets.
“The development of a holistic energy strategy starts with the assets and the potential flexibility in their energy consumption,” says Mark Davis, Managing Director at GridBeyond, a provider of intelligent energy technology for industrial and commercial businesses.
“Debarkers, chippers, grinders, refiners and paper machines have, on average, up to 30% of energy flexibility. Together with on-site generation such as CHP and battery storage, they are ideally positioned to participate in grid balancing services and benefit the business with an additional revenue stream of up to £100k per MW.”
Flexibility, in the context of energy, is defined as the difference between the highest and lowest amount of energy an asset can consume while working as intended without any impact on operational integrity. By identifying the flexibility of equipment and machinery and connecting them to an intelligent energy platform, such as GridBeyond’s Point platform, businesses can participate in energy services like demand response.
Demand response programmes help National Grid to balance supply and demand on the energy network. For example, if the forecast for wind generation is higher than that delivered, and supply cannot meet demand, large energy users are called upon to turn down their consumption. This creates opportunities for energy-intensive paper, pulp and wood businesses, as their flexibility to turn down at crucial times is financially incentivised. By monetising flexibility through National Grid’s programmes, paper, pulp and wood companies can gain quick access to new, long-term revenue streams in order to protect their bottom line, increase savings and enhance their sustainability credentials.
One of GridBeyond’s UK partners, a global leader in paper and packaging, connected two of its on-site CHP generators to the Point platform to participate in National Grid’s frequency response programmes. Shortly after that, the company started to benefit from an average additional monthly revenue in the range of £10k — all without any capital expenditure or impact on operational processes.
Besides financially beneficial participation in the balancing services, intelligent energy technology enables businesses to optimise their energy costs through access to smart tariffs and trading on the wholesale market. AI and machine learning-powered algorithms enhance efficiencies of on-site load, generation and energy storage, making it possible for businesses to avoid peak charges and to schedule business operations based on the cheapest week-ahead, day-ahead and intra-day energy prices.
“The energy network is evolving towards a decarbonised, decentralised and digitalised system. Paper mills, pulpers and wood mills all rely on critical power to ensure business continuity, and as such will require a deeper understanding of the energy markets, their risks, challenges and opportunities”, explains Mark Davis.
“Active participation in the energy markets and forward-thinking strategy have become particularly critical now, during the times of economic uncertainty, as energy technologies can help businesses to recover some of the revenues lost due to COVID-19.”
Resilience and operational edge
The development of a holistic energy strategy is not complete without a reliable mechanism to monitor and control real-time performance of each energy-intensive asset.
For instance, dryers in the papermaking process consume as much as 70% of all energy used by the pulp and paper producers, and perform a critical role in the process. This means that any undetected operational malfunction of those assets, may not only generate inefficiencies but also affect the production processes and business continuity if the asset fails or needs to be replaced at short notice. The operational resilience of the businesses can be further enhanced by taking advantage of the benchmarking and alerting power of intelligent energy technology, which identifies anomalies in energy consumption to flag potential maintenance requirements.
Early fault recognition supports predictive maintenance and retro-commissioning processes to prolong assets’ life cycles, reduce risk of operational downtime and increase efficiencies. Deloitte estimates that for heavy industry, such as paper, pulp and wood businesses, ‘predictive maintenance can reduce the time required to plan maintenance by 20-50%, increase equipment uptime and availability by 10-20% and reduce overall maintenance costs by 5-10%’, whilst McKinsey Global Institute predicts manufacturers’ savings from predictive maintenance could reach $630 billion in 2025.
As the world looks towards recovering from the economic and social damage caused by the pandemic, businesses are exploring the opportunities for fast access to long-term revenue streams, increased operational efficiencies and enhanced resilience. New technologies, particularly those that support intelligent energy management, should be integrated into post-COVID-19 recovery plans.
For more information on how GridBeyond can help wood, pulp and paper businesses improve their bottom line through enhanced energy services, visit our wood & paper mill industry page.