Economic benefits of demand response in the Finnish pulp and paper industry

Industrial Demand Response (IDR) presents a vital opportunity to enhance energy system flexibility, especially as the share of variable renewable energy continues to grow. Our paper studies the economic benefits of IDR in Finland's pulp and paper industry, which accounts for nearly half of the country's industrial electricity consumption. A load-shifting demand response model was developed using the open energy modelling framework (oemof) to represent the entire sector as a single flexible unit. The model simulates demand response participation across various electricity price scenarios and intervention periods, including stress scenarios based on the 2022 energy crisis. Our findings reveal that IDR can reduce peak electricity demand by up to 30 % and cut system costs for the industry by several million euros. Critically, DR's economic viability is profoundly amplified under high price volatility, relative cost reductions surged from 4 % with 2019 day-ahead prices to 7 % and 10 % with 2022 day-ahead and intraday prices, respectively. This substantial increase positions IDR as a financial resilience strategy during market stress. Furthermore, our analysis indicates that under extreme volatility, optimisation priorities shift towards holistic energy cost reduction rather than solely peak demand minimisation. Our work uniquely quantifies IDR's external economic amplification driven by acute market price volatility, providing empirical evidence of its immediate value. This distinguishes our work from existing literature that primarily focuses on internal operational constraints, specific production technology choices, or broad long-term system-level benefits. Despite limitations including deterministic modelling and industry aggregation, our study highlights the significant, yet untapped, potential for IDR in Finland's energy transition, underscoring the necessity of supportive policy and market incentives.