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Real-Time Process Data — Optimized Electricity Purchasing

Abitibi-Consolidated faced a Y2K-type deadline in 2001 when the province of Ontario confirmed plans to deregulate the electric power market on May 1, 2002. As a buyer of more than $100 million in elec...

December 1, 2003
By Pulp & Paper Canada


Abitibi-Consolidated faced a Y2K-type deadline in 2001 when the province of Ontario confirmed plans to deregulate the electric power market on May 1, 2002. As a buyer of more than $100 million in electricity annually for its five mills in Ontario, the company was challenged to install systems that would allow better monitoring of power consumption to match fluctuating market pricing and availability. In this way, it could afford to maintain production in the newly-deregulated environment.

The company saved millions of dollars by, first, creating its own in-house energy management application instead of spending $3 million for an off-the-shelf solution. Secondly, it gave management an effective tool to proactively optimize production around market conditions that could realize a $1 million reduction in electricity costs in just its first year of use. The entire solution was created and deployed in less than six months.

Montreal-based Abitibi Consolidated, Inc. is the world’s largest producer of newsprint, value-added paper, and a major producer of wood products. The company has about 16,000 employees around the world, deployed in 27 paper mills, 21 sawmills, three re-manufacturing and one engineered wood facilities, and 10 paper recycling centres. Each year, it manufactures approximately six million tons of newsprint, nearly two million tons of value-added papers and more than two million board feet of lumber. The recycling operations recover more than 2.2 million tons of recyclable paper.


Electrical power is a critical element in the mill production processes, so the company faced a huge challenge in 2001 when the Ontario provincial government confirmed a deadline of May 1, 2002 for deregulation of the Ontario electrical power marketplace. There are five paper mills located throughout Ontario, from Kenora, Fort Frances and Fort William in the west, to Iroquois Falls in the north and Thorold in the south, near Toronto. Together these five mills historically have purchased more than $100 million in electrical power every year. In a regulated power market, this was never a problem. We knew what the cost was per megawatt/hour and we knew about how much power we would consume each year to produce the pulp and paper we needed to service customer demand.

Electricity deregulation, however, raised a number of issues that directly affected the ability to produce pulp and paper. Like any commodity marketplace, electricity now is subject to wide swings in both availability and pricing. Heat waves in the summer and intense cold in the winter will elevate power demand throughout Ontario. Generating equipment breakdowns and even power availability in neighboring markets also affect the electric supply and cause fluctuations in pricing. Three of our five Ontario mills have hydroelectric generating facilities so that they can supplement or replace some of the provincial power as needed. What is not generated is purchased from the Ontario grid at market price or based on contractual agreement. Poorly managed power purchasing could result in additional costs of hundreds of thousands of dollars.

Responding to this situation required that we put in place a system that could overlay energy market information on our real-time electrical consumption so that we could monitor real-time conditions and make better business decisions on a more timely basis. We first investigated off-the-shelf energy management systems, but the only one that might have been suitable was priced at about $3 million, not counting annual support and maintenance costs. These costs were prohibitive, given the current economic situation in the newsprint market. We then examined our operations in Ontario to see if we could build our own in-house application to be more cost-effective. After much creative reflection from a team that included personnel from both the mills and the head office, we decided the answer was yes, we had the tools in place to do our own system. While it might not offer all the bells and whistles that the packaged system did, we felt we had all major key factors covered that would allow us to do it.

P1 Historians are key elements

One of those elements was our existing Realtime Performance Management (RtPM) solutions, from OSI Software. These modules were already used at 18 of our mills, functioning as the nerve centres for all production data and reporting. They were linked to various pieces of equipment, such as our DCS systems and programmable logic controllers (PLCs), via Windows-based human-machine interface (HMI) software. Because they were on the critical path for managing production at each mill, each of the RtPM systems could be tapped to provide the raw process data that we needed, including metering information. The primary modules included PI Historian servers, PI Process Book and PI Data Links.

We added a PI server at one mill that previously did not have one and we added a second at our headquarters offices in downtown Montreal, which served as the control centre for the entire application. We re-deployed a used PI system as a hot backup so that if anything happened to our primary server, we could switch over instantly. We then set up data links between the remote PI servers at each mill and the centre in Montreal.

The next step was to deploy OSI’s HTML interface, to access the new Independent Electricity Market Operator (IMO) web site to obtain market information over the Internet. The IMO is to the electric marketplace what the stock market is to the financial world. This link gives us continuously up-to-the-minute information on the availability and pricing of electricity. We also set up a link to the Environment Canada web site so that we could collect current weather information on both the metropolitan Toronto area and at the mill locations, in order to match weather changes to market conditions as well. We extended the use of PI/HTML by gathering information on the commodities futures markets for natural gas and crude oil.

We began to work on this solution, which now was officially known as the ACI Energy Management System (EM-SYS), in October 2001. One good thing about dealing with immovable deadlines is that they force people to work together to reach the common goal. In this case, we absolutely had to complete our project before May 1, 2002. We were fortunate to have the full support of our executive management, which meant we could request the services of internal resources such as key programmers and specialists from various locations in North America for temporary assignment to our project.

Our IT staff worked closely with both corporate management and the mill energy managers to determine exactly what their needs were. Our design and programming staff from various divisions worked together to build applications specifically to fit those requirements. We used the PI Process Book to create the system’s graphical user interface, including PI Data Links for reporting and for exporting data into other applications, such as Excel for spreadsheets. Since we were able to gather any production data we needed from any of the mills, in real time, we could overlay energy needs on on required and actual loads. We also created links between the PI systems and the electric meters at each site, so we knew exactly what the power usage patterns were during any production situation. Finally, we used a small OSI freeware utility called eNotification that allowed us to automatically send e-mails to support groups when a system problem arises or when a major price change occurs. Some mills also integrated their paging system into EM-SYS.

Easy navigation overview

On the IT side, the heart of the EM-SYS system is the System Watch screen, which monitors all servers, hubs and links on a 24×7 basis and provides continuous information on how the network is running.

If a connection should be lost, an alarm flashes and an e-mail is sent to me and to the IT manager at the mill. This screen provides an overview of all five mills and their consumption, every minute, along with web connections to the IMO,
Environment Canada and other valuable sites. Messages can be posted by EM-SYS users and can be seen throughout the system.

The control centre screen allows operators and managers to look at any of the five mills to see their planned demand, their actual load consumption, weather-related factors and a comparison of actual vs. planned consumption. Staff can also click on the IMO Price Watch to monitor current and forecast prices.

EM-SYS also includes a Load Plan Module that allows each mill to plan its daily load. This load plan shows a one-day window, with small rectangles representing every 15-minute increment. This screen covers all the heavy equipment for that mill, such as the thermo-mechanical pulp systems, refiners, paper machines, winders, etc. The base load is configured for every piece of equipment according to how many megawatts of power each machine consumes when it is running full-speed. A green display means that for that specified period of time — between midnight and 7:00 am, for example — it will consume “x” somewhere between 0 and 100%. Users can drill down and see, for example, that the day’s production plan in one mill may be to run from 7-7:15 am at 11.6 MWH, or 65% of its capacity — so various strategies can be planned for critical times. When units are red, that means the equipment is off and there is no power load at all.

This load plan screen allows management to click on a button, call up the data and see when different pieces of equipment are going to run.

They also can see the status of all turbine generation equipment. We consider generation to be a negative load because it is electricity doesn’t have to be bought from Ontario Power. Managers can adjust their production to match power availability and pricing by clicking on the Update button, then selecting the equipment they want to run for a selected time period and what percent utilization will be.

They can quickly build daily scenarios if desired, simply by selecting equipment for operation at desired time periods.

We monitor the aggregate demand for the five Ontario mills and their individual mill demands. Mills such as Iroquois Falls have their own generation facility, so they can have a negative load because their power purchases go down when they’re generating during the day.

They can purchase electricity at night and use their own generation during the day. When the price is high they can elect to shut down some equipment or the entire mill if the situation demands — and they can sell their generation to the grid. At times, electricity is the commodity of the day. Having this overview of the entire system is important because they’re not only concerned with power purchases, but they want to keep their water level behind the dam.

We also monitor aggregate demand for the whole of Ontario grid to track the demand variation. Green and red lines indicate positive or negative demand.

Yellow graph lines show the maximum load we have incurred for the month on an hourly basis. The market has different rules, regulations and costs for high and low peaks, both in daytime and at night, so the maximum consumed during those peak periods must be monitored to achieve the lowest maximum peak during the daytime. The strategy is to incentivize users not to use peak loads during high demand periods.

Even the weather is factored in. Data is drawn from Environment Canada’s website and monitored primarily for the Toronto area. This area is chosen since it is so heavily populated (with demand will varying widely) and will affect the grid more than less populated places.

Also monitored are temperature, wind chill, dewpoint, wind speed, wind chill, relative humidity, atmospheric pressure — even precipitation, which is important for the mills that have generation because they want to know whether the water level in their dams is going to go up or down.

All of this information comes together in the pricing arena. We pull pricing information from the IMO site on three price variants. The first is the Real Time Energy Market (RTEM), which basically is the spot market for electricity. This pricing is updated every five minutes. In addition, we monitor the Hourly Ontario Energy Price (HOEP), which is the hourly average of RTEM pricing. Since pricing is based on HOEP, it is the most important figure for us. Using RTEM, we calculate a predicted HOEP every five minutes so operators can have a sense, in advance, of what the true HOEP may be at the end of the hour. For us, this five-minute tracking provides a heads-up so that the hourly average can be anticipated. The third price movement tracked is what the IMO calls the Pre-dispatch, or their forecast for the next day. This comes to us between noon and one o’clock every day. So far the IMO’s forecast pricing hasn’t been very reliable, but we use it as a rough indicator for planning the next day’s operations.

Result: tightly controlled costs

The system has worked very well during its first year of operation. Before the market was deregulated, consumers and corporations alike were paying $43 per megawatt/hour. Since deregulation, the average cost has been $59 per MWH, from May 1 of 2002 to April 9 of 2003. Thanks to our EM-SYS, we have had an even more granular view, which has helped to fully optimize our energy costs. For example, from May to December of 2002 the average cost was $52 per MWH, but from January to April of 2003 it was $75 per MWH due to weather conditions. We can now view pricing on a basis of five-minute increments or any average up to one year.

The bottom line is that electricity is more expensive now, which makes it critical to manage efficiently, especially when consuming millions of megawatt hours. We have to be able to respond to fluctuations on a continuous basis or it can mean huge losses. As an example, during the first year of operation of the EM-SYS, the HOEP showed at one point a peak of about $800 for one hour. One mill reacted to it right away and altered production operations. Another looked at it and doubted that pricing was accurate. At the end of the hour the staff called the IMO to verify the data. It was correct, and that hour cost them tens of thousands of dollars.

How does this help us in planning operations? If the market is very high, at $200 per MWH, for example, and management has a shutdown scheduled for the next day, they might decide to take the shutdown right away and sell that power. It automatically goes to the grid at market price. Or they may decide, when possible, to run their pulp machines at night, when the cost is lower. Electricity cannot be accumulated but pulp can be made and stored, if the capacity and the reservoirs exist, so the power goes straight to the market at the market price and the company nets that per-megawatt price.

Another scenario might be to have a mill run its own generation during the day, when prices are high, if they have to make paper to meet customer deliveries. Then they can purchase power at night, when it is cheaper. If the EM-SYS system indicates that a generation/consumption profile like this might last for some period of days, management can use the Replicate button to replicate that profile and use it for the duration. Or if they’re planning a maintenance shutdown for 10 days, they can build or replicate the profile for that. It’s so easy to use that some energy managers have even saved standard scenarios by name.

Decision-making tool

Our philosophy from the beginning has been that this energy management system doesn’t replace human involvement in the decision-making process. It simply provides the information to facilitate business decisions. It doesn’t tell managers what to do, it just equips them with the information they need to make their own decisions. It helps reduce or eliminate mistakes. The system provides the pricing and they integrate that into their local business rules. Different mills will have different strategies depending on the grade of papers, the money they make on it and other factors — but management now have complete control over how they respond and how quickly.

As Je
an-Guy Trudel, Abitibi Consolidated vice president, Newsprint, puts it: “This new tool enables the five Ontario mills to manage their electricity consumption and save an estimated CDN$1 million per year. In addition, the system can be adapted for the company’s other mills in the short term with minimum modifications.”

And we accomplished all of this within a total budget of only $77,000, using our outstanding internal staff, instead of $3 million plus an estimated $450,000 a year for support and maintenance.P&PC

Guy Roussel is a senior analyst, IT Planning, at Abitibi Consolidated, Inc.