Electric has been very expensive this fall. While last year electricity paid less than three cents per kilowatt hour on the power exchange, last week the average price of electricity was nearly 10 cents per kilowatt hour.
The price of electricity this autumn has been between ten times higher than last year’s average price.
The price of electricity also fluctuates wildly now. For example, last week, the night before Friday, a kilowatt-hour cost just 0.2 cents, but on Monday night, the price already jumped to 28 cents.
Expensive electricity is felt in consumers ’electricity bills, but it particularly penalizes the electricity-intensive industry.
When will be facing a pain limit, ie will Outokumpu, for example, start considering reducing production at the steel mill, or will forest companies start shutting down paper machines?
Outokumpu does not wish to comment on its energy policy at all as the publication of the interim report is approaching. Forest company UPM, on the other hand, agrees to report on the operation of its energy system.
Vice President, Corporate Services, UPM Energy Anne Särkilahti according to there is no specific price level after which a factory would close. Operations are constantly optimized in relation to the price of electricity.
“Our large factories have dozens if not hundreds of processes, some of which are such that they can be timed for cheaper electricity. Each unit thinks about the starting point for its own activities when it makes sense. ”
Flexibility could be possible, for example, in a hot-milling process that makes mechanical pulp from wood, which consumes a lot of energy, Särkilahti says. The pulp can be made in storage at a time of low-cost electricity and, on the other hand, the process can be stopped through the most expensive hours.
Instead, for example, driving a paper machine down just because of a momentary rise in electricity prices is less likely. Shutting down and restarting the machine does not happen in an instant. Orders must also be delivered as promised.
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UPM is Finland’s second largest electricity producer after Fortum.
Energy usage management is a key part of the business for UPM and many other industrial companies. In the long run, the price of energy affects the location of production and investment.
On the other hand, large industrial companies are not in exactly the same position in the electricity market as ordinary buyers of electricity.
First, UPM is Finland’s second largest electricity producer after Fortum. The company has its own electricity generation capacity totaling approximately 1,400 megawatts, or a large nuclear power plant. UPM therefore also benefits from the high cost of electricity.
Among other things, UPM indirectly owns less than a third of the Olkiluoto nuclear power plant and receives a corresponding share of the electricity it produces.
It owns just over half of Pohjolan Voima (PVO), which in turn owns about 60 percent of Olkiluoto and also other power generation.
PVO produces about one-fifth of the electricity consumed in Finland.
In addition, UPM owns, for example, 19 percent of the hydropower company Kemijoki’s production and also directly owns hydropower plants.
UPM the energy business sells the electricity generated by the company to the market and not directly to its own factories.
“We optimize production in relation to the market,” says Särkilahti.
UPM’s actual end product units, on the other hand, decide from the point of view of their own production and customers what kind of price hedging they want to use and at what price to buy electricity.
The energy business then executes trades on the power exchange on behalf of the units.
UPM is also a member directly responsible for the balance sheet of the electricity market. Balance sheet operators undertake to produce the amount of electricity they sold on the previous day or to consume the amount they bought on the previous day.
The next day’s electricity is traded one hour at a time on the Nordpool power exchange. However, there is also intra-day trade in electricity between market participants.
If for example, the wind forecast is not correct and the wind power company will not be able to produce the promised amount of electricity, it will have to buy the missing electricity from other operators.
In that case, UPM or another member of the exchange can add capacity to its hydropower plants or perhaps transfer some electricity to the production process and sell the electricity it needs to the wind power company.
The price is, of course, harder than the day before.
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“Electricity consumers have also begun to play a much more active role in today’s internal market.”
Of the day the volume of internal trade has increased with the increase in wind power. Forecasting wind production is much more difficult than for other electricity generation.
“Electricity consumers have also begun to play a much more active role in today’s internal market,” says Särkilahti.
UPM has seen a niche in this. It has developed an automatic system that allows electricity users in charge of the balance to optimize their production and consumption in relation to the market price.
The system suggests the optimal operating model for each situation.
“When, after a year and a half, the electricity market moves to a 15-minute balance sheet settlement instead of the current one, it is practically impossible to handle situations without an automated system,” says Särkilahti.
UPM also sells its system to other companies.
In general, strong fluctuations in the price of electricity are an opportunity for a large producer and consumer to earn.
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The use of electricity in industry has had little flexibility in practice.
Power the high cost is due to many factors, such as the general energy shortage in Europe and the scarcity of water supplies due to the dry summer. However, the sharp fluctuation in prices is mainly due to the increase in solar and wind power production.
Production of wind turbines has fluctuated sharply over the past week.
In strong winds, the power plants have generated more electricity than the Olkiluoto nuclear power plant, which will be completed next year and has a capacity of 1,600 megawatts. In a weak mood, wind farm production remained low.
Grid company Director of Operations at Fingrid Reima Päivinen according to the industry, the use of electricity has been practically inflexible, although the price of electricity has been hundreds of euros per megawatt hour from time to time.
“Thus, at the national level, it would seem that there has hardly been any flexibility so far. Large users have also often protected the supply of electricity, which helps to reduce consumption flexibility. ”
Even Päivinen says that change is still underway. Whereas in the past electricity producers mainly adapted to the demand of electricity users, in the future electricity users will have to adapt to electricity production.
Fingrid is responsible for the electricity transmission network but also for the balance of the electricity system to the extent that the balance managers are unable to manage it.
If, for example, a nuclear power plant were to malfunction and had to be disconnected from the grid, Fingrid would quickly start up the required amount of reserve power.
“We are able to commission gas turbines that start in 15 minutes with a single mouse click,” says Päivinen.
In addition, Fingrid has acquired automatically activated power control from producers and large electricity consumers that maintains the balance of the electricity system at all times.
There is so much quick reserve power that it can temporarily replace the production of the Olkiluoto third unit, which will be completed next year.
“According to it, the amount is dimensioned.”
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