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Interaction between electrified steel production and the north European electricity system

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  • Toktarova, Alla
  • Walter, Viktor
  • Göransson, Lisa
  • Johnsson, Filip

Abstract

This study investigates the interactions between a steel industry that applies hydrogen direct reduction (H-DR) and the electricity system of northern Europe. We apply a techno-economic optimization model with the aim of achieving net-zero emissions from the electricity and steel sectors in Year 2050. The model minimizes the investment and running costs of electricity and steel production units, while meeting the demands for electricity and steel. The modeling is carried out for a number of scenarios, which differ in the following parameters: (i) cost of using new sites for steel production; (ii) transport costs; (iii) commodities export; (iv) flexibility in operation of a direct reduction (DR) shaft furnace; and (v) location of steel demand. The results reveal that a cost-efficient spatial allocation of the electrified steel production capacity is impacted by the availability of low-cost electricity and can differ from the present - day allocation of steel plants. The modeling results show that the additional electricity demand from an electrified steel industry is met mainly by increased investments in wind and solar power while natural gas - based production of electricity is reduced. Furthermore, it is found to be cost-efficient to invest in overcapacity for steel production units (electrolyzers, DR shaft furnaces and electric arc furnaces) and to invest in storage systems for hydrogen and hot briquetted iron, so that steel production can follow the variations inherent to wind and solar power.

Suggested Citation

  • Toktarova, Alla & Walter, Viktor & Göransson, Lisa & Johnsson, Filip, 2022. "Interaction between electrified steel production and the north European electricity system," Applied Energy, Elsevier, vol. 310(C).
    • Handle: RePEc:eee:appene:v:310:y:2022:i:c:s0306261922000654
    DOI: 10.1016/j.apenergy.2022.118584
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    Cited by:

    1. Superchi, Francesco & Mati, Alessandro & Carcasci, Carlo & Bianchini, Alessandro, 2023. "Techno-economic analysis of wind-powered green hydrogen production to facilitate the decarbonization of hard-to-abate sectors: A case study on steelmaking," Applied Energy, Elsevier, vol. 342(C).
    2. Lee, Hwarang, 2023. "Decarbonization strategies for steel production with uncertainty in hydrogen direct reduction," Energy, Elsevier, vol. 283(C).
    3. Weiss, Robert & Ikäheimo, Jussi, 2024. "Flexible industrial power-to-X production enabling large-scale wind power integration: A case study of future hydrogen direct reduction iron production in Finland," Applied Energy, Elsevier, vol. 365(C).
    4. Boldrini, Annika & Koolen, Derck & Crijns-Graus, Wina & van den Broek, Machteld, 2024. "The impact of decarbonising the iron and steel industry on European power and hydrogen systems," Applied Energy, Elsevier, vol. 361(C).
    5. Philipp C. Verpoort & Lukas Gast & Anke Hofmann & Falko Ueckerdt, 2024. "Impact of global heterogeneity of renewable energy supply on heavy industrial production and green value chains," Nature Energy, Nature, vol. 9(4), pages 491-503, April.
    6. Hu, Hang & Yang, Lingzhi & Yang, Sheng & Zou, Yuchi & Wang, Shuai & Chen, Feng & Guo, Yufeng, 2024. "Development and assessment of an integrated wind energy system for green steelmaking based on electric arc furnace route," Energy, Elsevier, vol. 302(C).
    7. Lopez, Gabriel & Galimova, Tansu & Fasihi, Mahdi & Bogdanov, Dmitrii & Breyer, Christian, 2023. "Towards defossilised steel: Supply chain options for a green European steel industry," Energy, Elsevier, vol. 273(C).
    8. Alexandra Hüttel & Judith Lehner, 2024. "Revisiting Investment Costs for Green Steel: Capital Expenditures, Firm Level Impacts, and Policy Implications," Discussion Papers of DIW Berlin 2082, DIW Berlin, German Institute for Economic Research.
    9. Walter, Viktor & Göransson, Lisa & Taljegard, Maria & Öberg, Simon & Odenberger, Mikael, 2023. "Low-cost hydrogen in the future European electricity system – Enabled by flexibility in time and space," Applied Energy, Elsevier, vol. 330(PB).
    10. Peter Klimek & Maximilian Hess & Markus Gerschberger & Stefan Thurner, 2024. "Circular transformation of the European steel industry renders scrap metal a strategic resource," Papers 2406.12098, arXiv.org.
    11. Peter Klimek & Maximilian Hess & Markus Gerschberger & Stefan Thurner, 2024. "Circular Transformation of the European Steel Industry Renders Scrap Metal a Strategic Resource," ASCII Working Papers 003, Supply Chain Intelligence Institute Austria.

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