German
steel industry will become the main European consumer of green hydrogen.
The European steel industry will become a major consumer of
renewable hydrogen, with German steelmakers having some of the most ambitious
plans in the region for its use. This is reported by
S&P Global.
The future potential demand of the German steel industry by
2030, according to the industry association WV Stahl, could reach 850 thousand
tons of hydrogen per year. Steel producers plan to connect to the national
hydrogen network that is currently being created, as well as produce their own
green hydrogen from electrolyzers.
The
German government expects total hydrogen demand to reach 95-130 TWh (2.85-3.9
million tons per year) by 2030, of which 40-75 TWh will be new demand.
S&P Global estimated the cost of producing green hydrogen by
alkaline electrolysis in Germany, backed by renewable energy purchase
agreements, at an average of €7.98 /kg in July.
Matthew Hodgkinson, senior hydrogen analyst at Commodity
Insights, notes that the transition to low-carbon steel production is
expensive. To make it comparable to current production methods, ETS prices
should be at least €150-200/t.
According to him, the full decarbonization of steel production
in the EU will require about 6-8 million tons/year of low-carbon hydrogen,
which is comparable to the current total demand for this fuel.
Salzgitter, Stahl-Holding-Saar, and Thyssenkrupp announced
tenders to supply large volumes of low-carbon hydrogen at the end of the
decade. These companies, along with ArcelorMittal, received public funding
commitments in 2023 and 2024 under the EU’s Important Projects of Common
European Interest program for hydrogen and low-carbon technologies.
Along with the environmental transition, a big jump in demand
for renewable energy is also expected. According to WV Stahl, the German steel
industry’s current demand for electricity from the grid is 12 TWh. These
volumes could double by 2030. For electrolysis, an additional 28-29 TWh of
green electricity will be needed. However, these volumes are a relatively small
part of Germany’s electricity demand, which was about 500 TWh in 2023 and is
projected to grow to 649 TWh in 2030.
Germany will invest about
€20 billion in hydrogen infrastructure by 2032. In July this year, the
country’s gas transmission system operators submitted a joint application for
the planned basic hydrogen network. About 60% of the future network will be
existing lines that are currently used for gas transportation.