(Bilbao / Spain) – The Spanish energy supplier Iberdrola SA and the Swedish steel manufacturer H2 Green Steel AB (H2GS) agreed to build a green hydrogen plant with an installed capacity of 1.000 megawatts. According to estimates, the investments amount to 2,3 billion euros.
The fuel will power a direct iron ore reduction plant to produce crude steel with a capacity of around two million tonnes per year. This would reduce CO2 emissions by 95 percent. In traditional steel production, the oxygen is removed from the iron ore using carbon and coke in a blast furnace (reduction process). The pig iron that is tapped from the blast furnace is liquid and is poured out as ingots at the end of the process. The direct reduction occurs using hydrogen at a lower temperature and sponge iron is produced in pellet form. Several sponge iron pellets are pressed together to form a briquette and are melted in an electric arc furnace.
Several possible locations on the Iberian Peninsula are currently being considered for the construction of the plant, each with access to renewable energy and all the infrastructure required for its operation. The project will be financed through a combination of public funds, green project financing instruments and own funds. Production is scheduled to begin in 2025 or 2026.
Companies are also looking into building a steel mill
The gigawatt electrolyzer is to be operated jointly by Iberdrola and H2 Green Steel. Iberdrola will supply the plant with renewable energy, while the production of green steel and all downstream metallurgical processes will be in the hands of H2 Green Steel. The possibility of building a steelworks at the same location that can produce between 2,5 and 5 million tons of green sheet steel annually is also being examined.
The decarbonization of the steel industry represents a major growth opportunity for Iberdrola, as it could mean an additional demand of around 5.000 terawatt hours per year - almost double the current electricity production in Europe - as well as 40 million tons of green hydrogen. “Large-scale production of green hydrogen will be crucial for heavy industry’s transition to more sustainable operations,” says Henrik Henriksson, CEO of H2 Green Steel.
Other companies are also on the ball
Iberdrola and H2 Green Steel are not the first companies to develop hydrogen-based systems Direct reduction to plan. For example, the steel manufacturer SSAB, the iron ore mining group LKAB and Vattenfall founded the Swedish joint venture Hybrit Development AB in 2016. In June 2021, a test production of 100 tons of sponge iron was completed in Luleå. By 2024, natural gas and then hydrogen will be used in a pilot plant in order to be able to compare the production results.
In May 2021, Salzgitter AG began building a demonstration plant for the production of directly reduced iron. It can also flexibly use both natural gas and hydrogen. The project is part of SALCOS (Salzgitter Low CO2 steelmaking). The test facility has a planned capacity of 2.500 tons per day and is scheduled to begin operations in the first half of 2022.
By 2050 at the latest, Salzgitter AG wants to implement the complete transformation of steel production towards hydrogen-based processes in several stages. This reduces the production of CO2 in steel production by up to 95 percent. As reported, part of the hydrogen is generated using electricity from specially built wind turbines
Photos
Iberdrola headquarters in Bilbao © Iberdrola
