Ofgem review risks damaging large energy users

/ins  Proposed changes to the UK’s electricity grid charging system are threatening to damage energy intensive businesses and undermine a government-backed drive to increase CHP capacity including biomass.

Ofgem, the electricity regulator, is currently carrying out a Targeted Charging Review (TCR) of the grid. It is concerned that with increasing numbers of both domestic and industrial users at least partly off-grid, there is a looming shortfall in the charging base of the network. The TCR aims to redistribute an increasing cost burden between users and will create winners and losers as a result. One sector which is highly likely to lose is CHP.

Energy intensive users fear that some of Ofgem’s proposals, which are due to go out to consultation by the end of November, are not proportionate and do not take account of the way they interact with the grid.

The estimated increase in cost of the proposed changes could amount to as much as £6.9 million a year from some companies, according to an analysis carried out by the Energy Intensive Users Group.

Increases of this magnitude would mean a huge loss of competitiveness for many energy intensive companies as well calling into question the economic viability of CHP projects including environmentally sustainable biomass. Energy intensive industries, which include the paper sector, are worth £15 billion per year to the UK economy employing 200,000 people directly, while supporting a further 800,000 jobs throughout supply chains.

Andrew Large, Director General of the Confederation of Paper Industries (CPI), said: “The TCR will mean the business case for investing in CHP will be badly hit with mills facing significant additional costs that they can scarce afford.”

CPI member companies, such as Iggesund, are concerned that changes could undermine the significant investment they have made in biomass. Iggesund has invested £110 million in a project to switch the whole of the Workington Mill’s energy supply from fossil-based natural gas to bio fuels.

Ulf Löfgren, Managing Director of Iggesund, said: “Our investment into the UK, on the back of government-led incentives, has allowed us to reduce our environmental footprint and move towards a sustainable future for UK energy. However, the sector is high cost and any major changes could jeopardise our existing work. As they stand, Ofgem’s proposals would, at the very least, force our parent company to reconsider any future investment in the UK.”

Caption: Iggesund Paperboard in Workington invested £108 m in a 150 MW biomass boiler. The targeted Charging Review might increase their annual cost with £ 5000 per employee.

Iggesund Paperboard is part of the Swedish forest industry group Holmen, one of the world’s 100 most sustainable companies listed on the United Nations Global Compact Index. Iggesund’s turnover is just over €500 million and its flagship product Invercote is sold in more than 100 countries. The company has two brand families, Invercote and Incada, both positioned at the high end of their respective segments. Since 2010 Iggesund has invested more than €380 million to increase its energy efficiency and reduce the fossil emissions from its production.
Iggesund and the Holmen Group report all their fossil carbon emissions to the Carbon Disclosure Project. The environmental data form an integral part of an annual report that complies with the Global Reporting Initiative’s highest level of sustainability reporting. Iggesund was founded as an iron mill in 1685, but has been making paperboard for more than 50 years. The two mills, in northern Sweden and northern England employ 1500 people.

Further information:

Staffan Sjöberg
Public Relations Manager

Iggesund Paperboard
SE-825 80 Sweden
Tel: +4665028256
Mobile: +46703064800


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Head office Iggesund Paperboard
Iggesund Paperboard AB
SE-825 80 Iggesund
Sweden / Sverige
Phone: +46 650 280 00
Fax: +46 650 288 00



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Staffan Sjöberg
Phone: +46 650 282 56
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The Iggesund Mill

Making the world’s best paperboard is easy. You need water, carbon dioxide and sunlight to grow a seedling into a tree. Then you need sustainable forest management that can deliver first-class timber. There must be a pulp mill and a paperboard mill, and then distribution channels to get the paperboard to everyone who wants to use it. Most important of all, though, to the manufacture of Invercote are the skilled professionals who do their best – people who are proud of what they achieve and do not compromise on the quality of their work. Iggesunds Mill has traditions stretching back to 1685. Throughout that time dedicated individuals have done their utmost to use the renewable forest to benefit other people.

A world-class mill

Iggesund Mill (including Strömsbruk Mill) in Sweden is one of the most advanced, fully integrated pulp and paperboard mills in the world. Not least thanks to our long term majority owner, we have very well invested mills. There are many benefits having an integrated saw mill – we manage raw material together and we can use all the waste from their production to either make pulp or energy. In return we feed the saw mill with steam used to dry the timber. At Iggesund Mill, 100% of the pulp used to make Invercote is produced on location and pumped wet to the board machine. This means that we use no market pulp. Not drying the pulp preserves some mechanical properties of the fibres.

This advanced technology – hundreds of metres of paperboard machines – is controlled by employees with various forms of special expertise. The machines work around the clock and year round to produce tonne after tonne of dazzling white paperboard. Technical perfection and numerical control processes are all well and good but for excellent results you also need team spirit and a good working atmosphere. Invercote’s unique properties are the result of the interplay between expertise, a positive spirit and cutting-edge technology.

Actively investing in bioenergy

In 2012 the new recovery boiler was inaugurated at Iggesund Mill, an investment made possible by the long term perspective of our majority owner. With it in operation, the mill produces all the heat it needs, and can also provide district heating to the nearby community. It also produces nearly all the electricity needed for the mill, and is connected to the grid to be able to output excess electricity if needed. As the new boiler was trimmed into operation, it drastically reduced a lot of emissions between 2013 and 2014: fossil CO2 by >85%, particles by ~45% and sulphur by ~35%

With the installation and trimming of the new recovery boiler, emissions to air have reduced drastically from already low levels – graph being updated shortly. Measurements have shown that only 1% of particles in the air of Iggesund village comes from the mill. The majority of particles comes from domestic fire places and cars.

Care for our customers and their businesses

Paperboard must be there when the customer needs it. All the quality features in the world are meaningless if the deliveries don’t arrive in time. Delivery precision is a high priority. A maritime transport system guarantees overseas customers receive shipments with the lowest possible environmental impact. The service doesn’t stop there. Every tonne of Invercote comes with access to documentation and knowledge about how to make best use of the paperboard. The knowledge and market-based technical support provided by Iggesund, help customers to achieve dazzling end results and optimal production economics.