Paper360 - March/April 2015 - (Page 68)

the bottom line | ENERGY The next energy Disruption A new energy windfall that will lower the cost of purchased electricity is in the offing as investment in solar and wind gain momentum. ROD FISHER Underground shale formations are yielding energy in the form of oil and gas in an abundance that few would have expected even 10 years ago. This phenomenon has dramatically lowered the cost of energy in some countries, particularly the United States, delivering a competitive advantage to American manufacturers, including many pulp and paper producers. Since energy is the paper industry's second-largest cost, this advantage can be significant. A similar windfall for manufacturers is about to arrive on many shores. This time, it will lower the cost of purchased electricity. It will make manufacturing in some areas more profitable and give a boost to economies, albeit not uniformly. For the paper industry, it will lower production costs for many mills and, perhaps more significantly, increase demand for many paper goods in those economies where the benefit materializes. The windfall will come from renewable energy's promise: finally being able to deliver power at costs that approach those of coal-generated power in many regions. For years, renewable energy-mainly wind and solar-has been more expensive than fossil fuels. So, while governments have subsidized them to make them competitive, there hasn't been enough power and its costs have been too high to make a difference. However, in the last five years, the price of solar panels has fallen so much-70 percent in the last five years according to a recent article in the New York Times-that renewable energy is emerging as a viable competitive alternative to fossil fuels. Investment in solar and wind is gaining momentum and in some regions has made renewable energy a significant economic force. Germany, the world's major leader in renewable energy generation, has demonstrated how important the impact can be: some 30 percent of Germany's electricity is now produced from renewable sources and utility company profits have been seriously affected. Most people believe, and accurately so, that renewables can't compete with large, new gas-fired utilities, and that they can't possibly produce enough to supply all the power we need. However-and here's the key-they don't have to in order to affect the price of power. As that same New York Times article explains, power costs vary greatly over the course of a day. In many countries, power prices are highest during daylight hours of peak usage, when demand approaches the grid's capacity to produce. Prices rise in response to the supply-demand balance, and that is when utilities earn a large portion of their revenue. Solar and windgenerated power need only produce enough power to satisfy peak-demand to have an impact on the highest of power prices. The paper industry globally spends just over $20 billion on purchased power every year; on average, European mills spend not quite 50 percent more per ton than North American and Asian mills. The difference between the amount of power used to make Figure 1. Power prices paid by paper mills vary across the globe. Darker countries in the map have higher prices. Source: FISHERSOLVE™, © 2015. 68 Paper360º MARCH/APRIL 2015

Table of Contents for the Digital Edition of Paper360 - March/April 2015

Guest Editorial
Over the Wire
TAPPI's Centennial: A Celebration 100 Years in the Making
Precision Alignment of Winders
Single-stream Waste Processing
iRoll at Irving
Fully Automated Continuous Digester
Twin Roll Press Upgrade
TAPPI Journal Summaries
Effluent Treatment
Microfibrils to Transform Paper Furnish
Consolidation Watch
Knowledge Builder
New Energy Windfall
Power from Waste
Safety Survey
Association News
Online Exclusives
Advertisers Index

Paper360 - March/April 2015