Spanish utility Iberdrola and Swedish startup H2 Green Steel (H2GS) have partnered to develop a €2.3bn ($2.6bn) green hydrogen-to-steel project in the Iberian Peninsula.

Iberdrola and H2GS plan to develop a 1GW green hydrogen plant by 2026 using renewable energy supplied by the former. The project will use the hydrogen to produce 2mn t/yr of direct-reduced iron, a feedstock for steel.

The two companies will also explore co-locating a steelmaking facility with capacity to produce 2.5-5mn t/yr of flat steel. The use of green hydrogen could reduce steelmaking CO₂ emissions by 95pc, the firms claim.

2mn t/yr – Direct-reduced iron to be produced by project

“Green hydrogen will be a critical technology in the decarbonisation of heavy industrial processes such as the production of steel,” says Aitor Moso, Iberdrola's liberalised business director.

“Innovative projects like this will help to speed up the commercialisation of larger and more sophisticated electrolysers, making green hydrogen more competitive.”

H2GS is also developing a 5mn t/yr green steel facility in Sweden, with startup planned for 2024. Investors in the company include investment holdings group Vargas, heavy vehicle manufacturer Scania and metallurgical firm SMS Group.

Car manufacturer Mercedes-Benz took out an equity stake in the business in May 2021 and plans to start using green steel in production from 2025.

“Our project in Boden in northern Sweden has proved that there is a very strong demand for green steel from a broad customer base,” says Kajsa Ryttberg-Wallgren, head of H2GS’s hydrogen business unit.

“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, get closer to customers, and meet the demand of an expanding market.”

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Author: Polly Martin