H2 Green Steel Partner Iberdrola on $ 2.6 Billion Green Hydrogen Program

Iberdrola Tower in Bilbao, Spain.

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Spanish power company Iberdrola and Sweden’s H2 Green Steel will collaborate to develop a major facility for producing green hydrogen. This is another example of how a company is interested in a hot sector.

In a Thursday announcement, the two companies announced that they would set up a green hydrogen facility with a 1 gigawatt electrolysis capacity on a € 2.3 billion ($ 2.6 billion) project. Financing comes from a combination of equity, green project finance and public funding.

Hydrogen has many uses and can be deployed in different industries, so it can be produced in different ways.

One method involves the use of electrolysis, where the electric current divides the water into oxygen and hydrogen. When the electricity used in this process comes from renewable energy sources such as wind and solar, it is also called green or renewable hydrogen.

The idea is to use green hydrogen from Iberdrola and the development of H2 Green Steel to produce approximately 2 million tonnes of Direct Reduced Iron (DRI) each year and use it to produce steel.

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For 1 GW, the size of the project is important. According to the International Energy Agency, the capacity of the electrolytic cell installed in the world in 2020 was only 0.3GW.

Development by Iberdrola and H2 Green Steel is located on the Iberian Peninsula (the specific location has not yet been announced) and is expected to begin production in 2025 or 2026.

The electrolytic cell itself is jointly owned and operated by both companies. Iberdrola will provide the site with renewable energy and H2 Green Steel will own and operate DRI production. This includes all processes related to downstream steel production.

The two companies also said, “We are looking for opportunities to work with the plant to co-locate a green steel production facility capable of producing 2.5-5 million tonnes of green flat steel annually.”

In a statement, Iberdrola’s liberalized business director, Aitor Moso, said green hydrogen would be “a key technology in the decarbonization of heavy industry processes such as steel production.”

Projects such as those planned at H2 Green Steel “help to accelerate the commercialization of larger and more sophisticated electrolyzers and make green hydrogen more competitive,” Moso said. rice field.

Reducing the environmental footprint of intensive industrial processes is an important challenge.

“In the heavy industry, the steel sector is the number one in CO2 emissions and the number two in energy consumption,” the IEA said, adding that the steel sector is responsible for 2.6 gigatons of carbon dioxide emissions each year. .. ..

“The steel sector is currently the largest industrial consumer of coal, supplying about 75% of energy demand,” he says.

I want hydrogen, but there are also hurdles

Over the last few years, many major companies have become involved in projects centered around green hydrogen.

For example, in November, Australia-based Fortescue Future Industries announced that it would become the UK’s largest supplier of green hydrogen after signing a memorandum of understanding with construction machinery companies JCB and Ryze Hydrogen.

In the same month, Norsk Hydro and oil giant Shell announced that they would explore the possibility of a joint project focused on green hydrogen production.

The potential of green hydrogen is exciting, but there are also hurdles to overcome.

In October, Siemens Energy’s CEO talked about the issues he felt the sector was facing and told CNBC that “there is no commercial case” at this time.

In a comment made during discussions on CNBC’s Sustainable Future Forum, Christian Bruch outlined some areas that need attention for green hydrogen to gain momentum.

“We need to define this technology and the boundary conditions that make these cases commercially viable,” Bruch told CNBC’s Steve Sedgwick. “And, obviously, we need a cheap electricity environment, and in this regard we need abundant renewable energy available to do this,” he argued. ..

A few months ago, in July, Eneru CEO Francesco Stares said, “There was no competition for capital between hydrogen and renewables.”

“Hydrogen today is a niche that needs to evolve into a commercial standard and … a big industry, competitive pricing,” said Stares, who will probably take 10 years to make such a change. I said it would be.

H2 Green Steel Partner Iberdrola on $ 2.6 Billion Green Hydrogen Program

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