(Salzgitter) – Salzgitter AG now officially has the funding decision from the federal and state governments for its “Salcos” hydrogen project on the table. The final aid amount, the payment phases and the exact funding conditions are now available.
Handover of the funding decision at the Hanover Trade Fair by Economics Minister Robert Habeck (right) and Prime Minister Stephan Weil (left) to Gunnar Groebler, CEO of Salzgitter AG. © Salzgitter AG
Federal Minister of Economics Robert Habeck, together with Lower Saxony's Prime Minister Stephan Weil, symbolically presented the funding of almost one billion euros to the group's board of directors Gunnar Groebler at the Hanover Trade Fair. Of this, around 700 million euros come from the federal government and 300 million euros are state funds. Together with the own funds of over one billion euros already released by Salzgitter AG, this “secures the financing of the first expansion stage of Salcos, which should be implemented by the end of 2025,” according to the company.
IPCEI funding confirmed by EU
The investment is funded as part of the “Important Projects of Common European Interest” (IPCEI). The the European Commission had already given the green light in principle last year. The administrative agreement for the provision of federal and state funding was signed by Salzgitter AG in September.
Goal of “Salcos” (SAlzgitter Low CO2Steelmaking) is to convert the facilities in Salzgitter to low-CO2 crude steel production in three stages. The first stage, with a capacity of 1,9 million tons per year, is scheduled to come into operation at the end of 2025.
Salzgitter AG wants to produce green hydrogen using green electricity as part of “Salcos”. This means that sponge iron is produced from iron ore in a direct reduction plant. This in turn produces raw steel in an electric arc furnace for further processing. © Salzgitter AG
By 2050, the complete transformation of steel production at Salzgitter AG towards hydrogen-based processes should be implemented. Three blast furnaces fired with coking coal will be gradually replaced by a combination of direct reduction systems and electric arc furnaces. According to company calculations, this saves around 95 percent of the annual CO2 emissions of around eight million tons. The group subsidiary Flachstahl GmbH and the London-based Primetals Technologies Ltd. had already signed a contract for the engineering, delivery and construction of the first electric arc furnace and the development of technical infrastructure in Salzgitter in late summer last year.
Green electricity for green hydrogen
Part of the hydrogen is generated using electricity from wind turbines, which were built, among other things, on the site of the steelworks. In November, Flachstahl GmbH also concluded an electricity supply agreement with Energie Baden-Württemberg AG (EnBW) for 50 megawatts of installed capacity from the “He Dreiht” offshore wind farm west of Heligoland. This means that the parent company will secure the supply of green electricity for 15 years from the new 900 megawatt wind farm, which according to plans will be completed at the end of 2025.
In addition, the industrial gas manufacturer Linde and Uniper SE, among others, supply the steel group with green hydrogen. The Danish Ørsted A/S will also supply electricity from offshore wind turbines in the future.
Salzgitter Flachstahl GmbH concluded its most recent contract with the Spanish energy supplier Iberdrola in mid-April. The group will thus secure 15 megawatts for 114 years from the 476 megawatt “Baltic Eagle” offshore wind farm, which will go online at the end of 2024 around 30 kilometers north of Rügen.
“With its ambitious project, the company shows that it is possible with modern technology to decarbonize the steel sector as the largest industrial CO2 emitter,” said Robert Habeck in Hanover. “At the same time, the future of Germany as a steel location and numerous jobs can be secured in the long term.”
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The steel group Salzgitter AG wants to only produce steel that is produced with low CO2050 emissions using green hydrogen by 2. © Salzgitter AG
Editor's note: After the editorial deadline, the power purchase agreement between Iberdrola and Salzgitter Flachstahl GmbH was announced. We have added this to the text.
