Iberdrola and H2 Green Steel to build 1GW green hydrogen plant

Spanish energy company Iberdrola and Swedish steel manufacturer H2 Green Steel have signed an agreement to build a green hydrogen plant with an installed capacity of 1,000MW.

The plant, costing an estimated 2.3 billion euros, will provide clean fuel to power a direct steel reduction furnace with a capacity to produce around 2 million tonnes of green steel per year.

The use of clean power will reduce CO2 emissions by 95%, according to Iberdrola.

"Large-scale green hydrogen production will be essential for heavy industry's transition to more sustainable ways of operating," said Henrik Henriksson, CEO of H2 Green Steel.

"By sharing the common goal of reducing emissions in hard-to-decarbonise industries, starting with steel in Europe, we are taking a truly global and innovative approach to green hydrogen production. Iberdrola brings invaluable experience, technology and know-how, which will enable us to scale up our green steel projects"

The site will be located on the Iberian Peninsula, where several possible locations are being considered. The goal is to commence production in 2025 or 2026.

Aitor Moso, Iberdrola's director of deregulated business, said: "Green hydrogen will be a key technology in the decarbonisation of heavy industrial processes, such as steel production.

"Innovative projects such as this will help accelerate the commercialisation of larger and more sophisticated electrolysers, making green hydrogen more competitive.

"With access to low-cost renewable energy supplies, and a highly skilled workforce, the Iberian Peninsula can play a key role in Europe taking a global lead in the development of this green technology."

The electrolyser with a 1GW capacity will be jointly operated by the two companies, with Iberdrola supplying renewable energy to the plant, while the production of green molten steel and all downstream metallurgical processes will be operated and owned by H2 Green Steel.

Both companies will also explore the possibility of locating a steelmaking facility capable of producing between 2.5 and 5 million tonnes of green steel plate per year on the same site.

"The project in Boden in northern Sweden has shown that there is a strong demand for green steel from a broad customer base. The collaboration with Iberdrola will strengthen and refine our Boden platform, infrastructure and project execution," says Kajsa Ryttberg-Wallgren, EVP Head of Business Unit Hydrogen at H2 Green Steel.

The project will be financed through a combination of public funds, green project financing instruments and own funds.

Iberdrola sees the decarbonisation of the steel production industry as a great growth opportunity as it could mean an additional demand of around 5,000 TWh/year, equivalent to almost twice the current electricity generation in Europe, as well as 40 million tonnes of green hydrogen.