Energy costs and the relationship between energy use and climate change have resulted in a focus on energy issues in the Group. It is crucial to Holmen's long-term profitability to keep energy consumption and costs as low as possible.
Company-generated electricity corresponds to 50 per cent of requirements...
Holmen wholly or partly owns 21 hydro power stations located on the Umeälven, Faxälven, Gideälven, Iggesundsån, Ljusnan and Motala Ström rivers. Production at the hydro power plants in 2015 totalled 1 302 GWh. Combined with wind power electricity production and the company's own electricity production (known as back-pressure power), this means that Holmen is approximately 50 per cent self-sufficient in electricity (2015).
The wind farm in Varsvik, in the Municipality of Norrtälje, was gradually taken into operation in autumn 2014. This farm is the first on the Group's own land and also the largest wind farm in the county of Stockholm. Holmen's share of the electrical energy produced in 2015 was 82 GWh.
Holmen is a partner in the BasEl wind power company VindIn. Holmen's share of the electrical energy produced in 2015 by VindIn from its wind turbines was 56 GWh.
... and the rest is purchased
Most of the electricity needed at Holmen's mills is purchased externally. The Group is consequently one of the largest purchasers of electrical energy in Sweden. To deal with the risks this poses, hedged long-term contracts are signed with the electricity suppliers. Purchases are hedged to just over 65 per cent for 2016-2018 and 40 per cent for 2019-2020. Hedging means that Holmen will not be fully affected immediately by changes in electricity prices.
Bioenergy meets 70 per cent of the need for thermal energy
Biofuels, mainly in the form of bark and wood-containing liquors, meet 70 per cent of Holmen's thermal energy requirements. Recovered thermal energy accounts for just under 20 per cent of the thermal energy needed. Remaining quantities of heat are produced primarily at and close to the mills using natural gas, oil and LPG.
Iggesund Mill and Hallsta Paper Mill are located close to built-up areas. Surplus heat is delivered to the municipal district-heating networks. Surplus electricity from the mill in Workington is sold to the national grid.
Efforts to improve energy efficiency and reduce the use of fossil fuels are increasing for reasons related to climate change and resources. Holmen is therefore making active efforts to identify and implement energy-saving measures and to increase the level of self-sufficiency in energy. This mainly involves improving efficiency in the use of energy and increasing the proportion of electricity produced by the company, as well as making greater use of waste heat and increasing the proportion of bioenergy.
Energy management systems
All Holmen production units have certified energy management systems.
Holmen is a major land owner and has the potential to develop its land holdings by establishing wind farms on its own sites with good wind conditions. Hydro and wind power have low operating costs, since they do not require the purchase of fuel, and production is entirely free of carbon dioxide.
The erection of wind turbines has stalled in Sweden due to poor profitability. If/when conditions improve, Holmen will be among those ready with projects that are sufficiently viable.
Along with the Eurofideme 2 investment fund, Holmen has built a wind farm at Varsvik, a few kilometres from its paper mill in Hallstavik. The turbines came on stream in autumn 2014 and annual production capacity is estimated at 165 GWh. Building the wind farm costed around SEK 650 million. During the first full year, 2015, production reached 164 GWh. Holmen's share is 50 per cent, i.e. 82 GWh.
At Blodrotberget and Blackfjället in the Municipality of Örnsköldsvik, environmental permits were granted in 2013 for around 70 wind turbines, with annual production in the region of 500 GWh. In 2015, a power line permit was obtained for the connecting power lines, which means that the project is ready for construction to begin.
Holmen and E.ON signed a contract to jointly develop wind power in the Municipality of Örnsköldsvik at the beginning of 2011. At the end of 2012, environmental permits were obtained for two of the three areas in question. With around 70 turbines spread over three areas, mainly on Holmen's land, annual production could reach around 475 GWh when all turbines have been built.
Wind surveys have also been conducted on Holmen's land in Västernorrland in recent years. Applications for environmental permits and power line permits have been submitted for two of the projects. This is the case for the Blåbergsliden project, with its 30 or so turbines and annual production of around 300 GWh. Supplements to the reindeer husbandry analysis are under way as a final measure before a decision can be made on the environmental permit. This is expected to happen in 2016. In 2015, an application was submitted to the authorities for 30 wind turbines in Blisterliden. Wind surveys and an environmental impact analysis are under way at Högaliden 2, which is similar in scale to the other projects.
In late 2015, the environmental authorities rejected an application to erect a wind farm at the mill in Workington. The prospect of obtaining leave to appeal was judged to be poor. At the same time, the scope for profitability in wind power has radically worsened due to decisions by the British government. Under these circumstances, the project has been shelved.
An 18 per cent stake in VindIn AB gives Holmen part ownership of the Trattberget wind farm in the Municipality of Örnsköldsvik and Skutskär in the Municipality of Skutskär. Another wind farm, Svalskulla in Pohjanmaa, Finland, was also brought on stream in 2014. In total there are now 40 turbines supplying electricity to Holmen and the other stakeholder companies. Overall, VindIn's turbines are expected to produce around 305 GWh per year, with Holmen's stake currently equating to production of around 54 GWh per year. Wind power production was very good in 2015, with annual production of 317 GWh, and Holmen's share amounting to 56 GWh.
Holmen extracts biofuel from its own forests and has become more active as a buyer and seller on the biofuel market. Holmen's long-term forest stewardship efforts are increasing the total stock of wood. By taking further measures to stimulate growth, it will therefore eventually be possible to increase the volumes of wood and biofuel extracted.
Work is in progress in the Group to improve the prospects for extracting energy from by-products/waste. Various measures are being taken to raise the calorific value of the materials.
The staff unit New Business Development initiates research into innovation and product development. Its work includes investigating how waste and by-products from the mills can be further processed into base chemicals for customers in the chemicals industry, for example.
Holmen sees peat as an interesting complement to biofuel. Peat is considered a slowly renewable resource, which makes it possible to add value to certain land assets within Holmen that are not productive forest land. A redundant peat field can be restored as a wetland or planted with forest.
Holmen currently has a peat field outside Örnsköldsvik that was taken into use in 2009 and is harvested annually for energy purposes. In contrast to 2014, 2015 had a rainy summer, which led to a poorer annual harvest, equating to 63 (93) GWh electrical energy. In 2015, Holmen Energi continued to examine the possibility of using peat as a raw material for the production of soil improvers. This work was conducted in collaboration with Holmen Skog's nurseries and the results over the year have shown that peat has considerable potential in this area.