German steel company Salzgitter and Swedish state-affiliated energy group Vattenfall have signed a fifteen-year power purchase agreement for 300 GWh/year of wind from a farm currently being built in the North Sea, off the northwestern coast of Germany, Salzgitter said Aug. 29.
The PPA stipulates that fossil-free electricity from the Nordlicht 1 offshore wind farm will be available for Salzgitter’s steel production from 2028, and that Salzgitter will receive a share of 75 MW of connected load from Nordlicht 1 over a period of 15 years.
Green steel needs green energy, and that is why this agreement is important in securing energy needs for the Salcos program (transformation of steelmaking operations toward low-CO2 production processes), Gunnar Groebler, executive chairman of Salzgitter, said in the statement.
Salcos is aimed at decarbonizing production at Flachstahl — Salzgitter’s largest steelmaking site — by switching the mill’s manufacturing process from being blast furnace-basic oxygen furnace (BF-BOF) based to using direct reduction of iron-electric arc furnace (DRI-EAF) technology powered by fossil-free electricity and green hydrogen. Once implemented in 2033, it will enable a 95% drop in Salzgitter’s own CO2 emissions, as well as reducing Germany’s overall CO2 emissions by 1%.
For Salzgitter, the electricity partnership with Vattenfall is the seventh green power PPA secured for its Salcos green steel project. In total, they should ensure that by 2025, half of the Flachstahl plant’s power demand comes from non-fossil sources, increasing to 100% coverage in 2030.
Vattenfall is building the Nordlicht 1 offshore wind farm comprising 68 wind turbines for a total capacity of 980 MW about 85 km north of the German island of Borkum. The farm is scheduled to be connected to the grid in 2028. Vattenfall holds a 51% stake in the project and wants to use its share of future electricity generation to supply customers in Germany.
Vattenfall’s Head of the Markets Martijn Hagens said that customers highly value PPA-based power supply as it offers competitive prices and a guarantee of origin — that the electricity quantities purchased actually come from renewable sources, including proof of the type and location of generation.
The guarantee of origin will lend both Vattenfall and Salzgitter the right to claim a premium for their respective products. For Salzgitter, the GO will be a tool to prove its steel is green.
The number of electricity partnerships between producers and industrial companies is set to grow; the PPA volume in Germany alone could rise to 192 TWh by 2030 – covering a quarter of the country’s total electricity demand, Salzgitter said citing the German Energy Agency.