Combined Heat and Power: The Carrot and the Stick

EU policies on renewable energy and carbon trading are tipping the balance for energy-intensive pulp and paper mills. Now there is a good economic case for switching to high-efficiency biomass boilers to meet their heat and power needs – and reduce waste in the process.

Staff report

For energy-intensive industries, decisions on how to meet energy needs quickly affect the bottom line, and at the moment it seems that every new development will increase the pressure. Energy prices are increasing, competition is increasing, and in Europe, at least, new pressures in the form of emissions limitations and carbon trading are being brought to bear.

Europe’s pulp and paper mills are intensive energy users and they are unlikely to have the option of moving far from the forests that provide their raw material supply to find a more attractive energy regime. But in fact, for these industries, the news is not entirely bad: the sticks and carrots of the EU’s low carbon agenda support a change in approach that will in the long term help the industry maximize the efficient use of energy and materials.

The key is national and EU measures that are intended to promote the switch from using fossil fuels for power and heat generation to biomass and other ‘green’ fuels. Subsidising that change can often also mean underwriting the switch to new, more efficient combined heat and power (CHP) plants that may have offered insufficient or marginal benefits from improved efficiency alone. Such measures are especially interesting to these industries, because their need for reliable heat and steam is much greater than their electric power load. Electricity is a useful by-product from the plant.

Pulp and paper mills in Austria, Sweden and Germany have all responded to the call for higher efficiency, reduced waste being sent to landfill, and the production of ‘green’ power.

Austrian pulp and paper manufactuturers benefit from a green subsidy on power exported to the grid
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A new combined heat and power plant at paper company M-real’s Hallein mill in Austria is one example. It will supply 21 MW of process heat in the form of steam, along with 5 MW of electricity, which can be exported to the power grid at favourable rates.

The mill currently uses a variety of sources for its heat and steam supply. The main boilers produce steam at 100t/hr using liquor from the paper-making process and these are augmented by a dual fuel plant, running on heavy fuel oil or gas, that supplies steam at 75 t /hr. Four additional fossil-fuelled steam blocks provide steam at 30 t/hr and a reheat boiler has 1.5 t/hr available as backup.

The new CHP plant will replace the four steam blocks. It will be fuelled with sludge from the process, bark stripped from raw materials and other residuals, backed up by wood from local forests. Fuelling the new plant will require the plant to process some 250 000 m3 of residuals and wood fuel each year, with the wood transported from as far as 70 km away, but pulp mill and energy manager Erich Feldbaumer points out that the residuals would be handled on site in any case, and burning them in the new CHP plant will reduce the amount that has to be sent to landfill as waste.

The decision to build the new plant was an economic one, says Feldbaumer, and it seems Europe’s CO2 emissions trading scheme (ETS) tipped the balance. Under the trading scheme each pulp and paper mill has an annual CO2 emissions allocation, as do all power stations and plants in a number of other industries indcluding cement manufacturers. Sites producing more than their allocation are fined, but allocations can be traded across Europe so the scheme aims to give an economic incentive to plants that can reduce their carbon emissions to do so.

Under the ETS, the Hallein mill’s CO2 emissions have been capped at 400 kt annually for the next three years. Of this, Feldbaumer estimates, some 118 kt arises from burning fossil fuels. The new CHP unit will cost around €35 million ($45 million), but it will enable Hallein to reduce its CO2 emissions by around 38 000 t a year – a reduction valued by M-real at around €10 per tonne. That will provide it with an additional return of €380 000 from selling its excess ETS allocation.

A second benefit is the 5 MW of ‘green’ electricity supplied by the plant to the local grid. In some countries that power would be mainly used on site, but under Austrian regulations it must all be exported onto the grid and Hallein must buy back from the grid to meet its requirements. But because the export is ‘green’ power, that too benefits the mill. “We buy power at €60 per MWh,” explains Feldbaumer. “but we get a green subsidy for the export and are paid €150 per MWh.”

The main contractors for the new plant are Austrian Energy & Environment, supplying the fluidized bed boiler and steam turbine island, FMW, providing biomass handling, Alpine Mayreder supplying foundation and concrete works and ABB supplying a power grid connection. Contracts for Hallein’s new plant were signed in summer 2004 and operation is due to start in spring 2006.

In Sweden a second pulp and paper company, Billerud, is investing around €115 million in on-site power and steam supply at three mills – Karlsborg, Gruvoen and Skaerblacka. Kvaerner Power will convert the existing grate boilers to bubbling fluidized bed (BFB) technology to burn biomass, while Siemens Power Generation will provide three new steam turbines for the three sites.

Kvaerner Power has become a significant supplier of biofuel fired power boilers and recovery boilers for the pulp and paper industries. It has over 130 bubbling fluidized bed (BFB) boilers and 60 circulating fluidized bed (CFB) boilers in operation. The company says BFB boilers are specified for low-heat fuels such as biomass, while the CFB type is used for higher calorific value fuels, including coal.

The materials to fire biomass boilers are often readily available at pulp and paper mills
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The BFB boilers are designed for power generation from biomass and recycled fuel and can be supplied in power ranges from 20MWt to 300MWt. The development of this type of combustion began with the incineration technology for wood waste and sludge in the 1970s. The first industrial BFB boiler saw daylight in the mid-1980s, and since then the company has supplied successively larger units. A major design innovation for the Hybex BFB boiler, in the mid-1990s, was the hydro beam floor – an advanced solution for removal of coarse material from the furnace. The largest biomass fired bubbling fluidized bed boiler in the world was installed at UPM-Kymmene’s Kuusankoski pulp and paper mill in Finland in 2002. The 269 MWt Hybex boiler uses bark, forest residue, biosludge and peat as fuel.

The CFB boilers are used with biomass, recycled fuel and coal at sizes from 50 MWt to 600 MWt. The key element is a “cyclone” that returns solid material to the lower part of the furnace. The CFB flagship is the world’s largest biomass-fired circulating fluidized bed boiler, for Alholmens Kraft in Pietarsaari, Finland, which has a steam capacity of 550 MWt. The power plant’s fuel sources include bark from the nearby pulp and paper mill, wood waste from the region’s sawmills, branch wood left from timber harvesting and peat.

Billerud project co-ordinator Lennard Vikstrom says of the three-site project, “The old turbines were too small, and we have to buy power on the open market.” Only about 30 per cent of the three mills’ needs are currently met from existing boilers, so the power import is considerable. The answer was easily available on site: bark and fibres that are already removed and recovered from the wood chip that is the mill’s raw material, along with chemicals and other material recycled from the mill processes and sawdust.

Much of that material was already used to provide steam and power but the old turbines did not have the capacity to use it all. That meant there was additional fuel already available. “The new turbines are all rated at 40 MW,” explains Vikstrom, “and that means we only need to buy 30-40 per cent of our power, instead of around 60 per cent at present. We will have increased steam production and have also increased steam pressure to 60 bar. We need that as we have already increased production.”

All the power and steam produced by the new units will be used on site, but Sweden’s support for this type of renewable energy does not depend on it being exported. The government typically provides a subsidy of €3 per MWh for biomass fuelled electricity, which might subsidize a typical 40 MW plant operating for 8000 hours by nearly a million euros annually. Billerud said the new plants were expected to have a payback period of four to five years.

At the Stendal pulp mill in Germany, which started up at the end of 2004, an Ecofluid boiler from Austrian Energy & Environment (AE&E) provides almost all the necessary steam and power. But since the boiler is fuelled almost entirely using biomass – 70-80 per cent of it virgin bark and waste and the remainder rejects from the mill process – none of the power is used on-site. The German renwable energy law provides a fixed tariff of around €85 per MWh for biomass-sourced ‘green’ electricity exported to the grid, so the entire production is exported and the mill imports power to meet its needs at a more favourable price.

AE&E was awarded the contract for the fluidized bed boiler, capital cost €20 million, and related equipment in September 2002 by RWE Solutions. RWE Solutions, located in Duisburg, acts as a general contractor to ZSG, which is the owner of the plant.

In three countries, emissions trading and higher efficiencies have combined to make the switch to biomass-fuelled CHP economically attractive. These three companies are unlikely to be the last to take that decision.

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