Iberdrola and H2 Green Steel have signed an agreement to build a green hydrogen plant with an installed capacity of 1,000 MW and an estimated investment of 2.3 B euros.

The new plant will power with clean fuel a direct steel reduction furnace with a capacity to produce around 2 MMtpy of pure green steel, with a 95% reduction in CO₂ emissions.

The site will be located on the Iberian Peninsula, where several possible locations are currently being considered, with the intention of production starting in 2025 or 2026. All locations that H2 Green Steel and Iberdrola are evaluating will have access to renewable energy, as well as all the infrastructure necessary to operate a successful hydrogen, green steel business.

The two companies have agreed to build a green hydrogen plant with an electrolysis capacity of 1 GW. The electrolyzer will be jointly operated by Iberdrola and H2 Green Steel. Iberdrola will supply 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 MM tpy of green steel plate on the same site.

A sector with growth potential

The decarbonization of the steel production industry is a great growth opportunity for Iberdrola, 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 MMt of green hydrogen. The company is therefore accelerating the implementation of the entire hydrogen value chain.

Ultimately, it is possible to decarbonize steelmaking and there are already several promising alternatives through direct electrification or green hydrogen. With the expected cost reductions from renewables and green hydrogen driven by Iberdrola, green steel could become more competitive, to the benefit of all consumers.

"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. With two European locations, we will make an even greater impact, be closer to customers and be able to meet the demand of a growing market. Together with Iberdrola, we are creating a broader European platform for the green hydrogen economy," said Kajsa Ryttberg-Wallgren, EVP Head of Business Unit Hydrogen at H2 Green Steel.