Battling climate change will transform the energy use of every manufacturing company. Tightening climate regulation, changes in the energy market, and changes in consumers' climate attitudes are spurring industry to reduce emissions and use low-emission electricity.
"In the energy market, the shift towards renewable production will lead to disruption. Energy production will not be as flexible as it used to be, so we need to find flexibility in consumption, too," says Anne Särkilahti, Director of Business Services at UPM Energy.
There is a greater need for demand response in the industry, when the volatility of the market price of electricity grows, as we have seen the recent months. The rise in electricity prices is partly due to climate work, as emission right prices are at a record high, and it has not yet been possible to sufficiently replace coal with renewable wind and solar energy production.
"Many businesses may have a wind power agreement, and they are using or soon will be using batteries and electric boilers. Energy is no longer just a raw material, but managing the whole system becomes important in the transformation," continues Särkilahti.
The whole society benefits
In its own climate work, UPM Energy is committed to keeping its place at the forefront of climate change mitigation and to developing its knowhow and skills. It provides industry with solutions for decarbonising and, more broadly, electricity market expertise such as optimisation and trading services.
At the background is the decades-long energy management optimisation work within the company, especially at UPM's paper mills. Optimising energy use has a direct impact on climate combat.
"When electricity-intensive industry drives, in practice, a reduction in the production of coal and gas power plants, emissions from society as a whole will decrease. In the big picture, the effects are significant," says Petri Hyyryläinen, Director of Energy in UPM's paper business.
With the timely use of energy, companies can also reduce their electricity bills.
For a paper mill, electricity consumption is an attractive target for optimisation, as electricity's market price is determined every hour, unlike the price of wood or labour. When electricity prices fluctuate, paper mills can take advantage of their flexibility and improve their overall cost competitiveness.
One aspect of risk management
For a production plant, optimising energy use means both managing cost competitiveness and mitigating climate change. In an increasingly complex energy market, it is also market risk management.
"Even if you don’t always make big money in the electricity market, you can at least make sure you do not lose big money. For us, optimisation is also market risk management," says Hyyryläinen.
Energy optimisation can be described with an everyday example: In general, the market price of electricity is at its highest in the middle of the day on weekdays. Then it is worthwhile for an electricity-intensive production plant to avoid market purchases as well as electricity-intensive production.
"For example, a company or factory can make intermediate products for storage when electricity is cheap and process the stored products when electricity is expensive. When you go through the entire production process and all its steps, there are usually several places where savings can be made," Särkilahti describes.
For one plant, optimising and finetuning the energy process may take years, but the work can yield the first results quickly. In the longer term, the importance of optimisation will only increase as renewable energy production grows because of climate change and with this, the momentary volatility of prices in the electricity market increases.