Steelmaking is the world’s most carbon-intensive industrial sector and accounts for approximately 7% of global CO2 emissions (~2.6 gigatonnes of CO2 per year)1. Today, most of the world’s steel is produced via the blast furnace-basic oxygen furnace (BF-BOF) method. The process relies heavily on coal, both as a reducing agent to extract iron from ore and as a source of energy. In fact, coal currently provides around 75% of the iron and steel industry’s total energy demand.
Reducing the steel industry’s dependence on coal will be essential to its decarbonization and to the success of the global energy transition. Hydrogen-based direct-reduced ironmaking (DRI), in combination with electric arc furnaces (EAF), currently represents the most viable strategy for reducing emissions and putting the sector on a path to net-zero.
In this article, we discuss the potential of DRI-based steelmaking using green hydrogen and outline how Hitachi Energy is supporting the industry with innovative solutions for electrification and grid connection of electrolyzer plants.
BF-BOF vs. DRI
BF-BOF accounts for the majority of steel production today.
The process entails the conversion of iron ore into molten iron in a blast furnace using coke.
The coke serves both as a fuel to heat the furnace and also as a reducing agent to convert the iron ore (iron oxide) into molten iron (also known as pig iron). Limestone is typically added to remove impurities from the ore in the form of slag. The molten iron is then refined in a BOF, where high-purity oxygen blasts through the molten iron, reducing its carbon content and adjusting its chemical composition to produce steel.
The carbon intensity of BF-BOF steelmaking can vary significantly depending on the plant’s design, but is estimated at ~1.90 – 2.70 tCO2 per tonne of steel produced2.
DRI represents a cleaner and more flexible method of steelmaking. It involves reducing iron ore into a solid form called sponge iron which has a high iron content and porous structure. This is done through reduction in a rotary kiln or a fluidized bed reactor using natural gas or hydrogen. The solid iron can then be melted in an EAF. Depending on the specific DRI process, it can also potentially be melted in a traditional BOF alongside molten iron from a blast furnace.
The primary advantage of the DRI-EAF route is that it eliminates the need for coking coal, reducing the overall carbon intensity of the steelmaking process. If natural gas is used, emissions from the DRI-EAF route (using reformed natural gas) are estimated between 1.50 – 1.70 tCO2 per tonne of steel produced. If hydrogen is used, this figure can be reduced by as much as 95%3.
Addressing grid integration challenges
H2-based DRI plants need a continuous supply of hydrogen. In the case of green hydrogen, the construction of a giga-watt scale electrolysis plant is required (if the hydrogen is not available via a nearby pipeline). This can present significant challenges for steel producers, particularly when it comes to connection to the high-voltage grid.
Similar to electric arc furnaces, designing the electrical power supply system of a large electrolyzer plant is highly complex and requires measures to compensate for the variable electrical loads experienced and the power conversion from AC to DC. Failure to address factors like reactive power compensation and harmonic filtering can lead to plant trips from the grid and potentially unsafe conditions.
With decades of experience connecting industrial assets to the grid, Hitachi Energy is capable of supporting steel producers with electrolyzer plant development. Our Grid-to-Stack approach is a holistic solution that covers the entire power supply package of the plant – from the grid connection down to the electrolyzer stack terminals.
We partner with customers to facilitate seamless execution across the entire project lifecycle -- from early stage project origination, due diligence, and grid studies, through to ensuring grid code compliance and optimizing the complete electrical supply system of the plant. This is complemented by our portfolio of digital solutions and service level agreements, which enables customers to reduce their levelized cost of hydrogen production.
Our Grid-to-Stack approach is currently being utilized at several green hydrogen plants around the world. One example is H2 Green Steel’s DRI plant in Sweden. Hitachi Energy is leveraging its capabilities to optimize H2 Green Steel’s value chain to plan, build, operate, and maintain the power infrastructure.
By using green hydrogen instead of coal, CO2 emissions will be reduced by 95% compared to traditional steelmaking. This will be equivalent to removing three million passenger cars per year from road.
Using green hydrogen for heat
Another potential use case for green hydrogen in steel plants is heat production.
Many plants today use hot rolling, which involves heating the steel above its recrystallization temperature – typically around 1000°C (or higher for carbon steels). At these temperatures, the steel becomes “softer” and more pliable so that it can be shaped into its final form.
Heat is typically provided by combusting natural gas or some other hydrocarbon, such as propane. If green hydrogen is used as a replacement, direct CO2 emissions from heating are eliminated.
In 2023, Nordic-based Ovako became the world’s first steel producer to use green hydrogen to heat steel before rolling at one of its plants in Sweden.
Hitachi Energy played an important role in the project, performing grid studies and providing an integrated Grid-to-Stack solution for the 20MW onsite electrolysis plant. The equipment scope included components such as transformers and rectifiers, related control equipment, and high-current connections required to convert alternating current from the distribution grid to direct current used in the electrolyzer.
The plant is currently in operation, producing up to 3,880 cubic meters of green hydrogen per hour to fuel steel heating furnaces and reduce the rolling mill's emissions to almost zero4.
As one the industry’s first movers in developing digital solutions for green hydrogen production, Hitachi Energy is also supporting preventive operation and maintenance of the electrolyzer plant with risk-based asset health software based on its Lumada APM solutions.
Conclusion
Decarbonizing global steel production will be crucial to driving a successful energy transition. Hydrogen-based DRI represents a clean, scalable alternative to traditional steelmaking processes, and can reduce the industry’s reliance on coal. However, for H2-based DRI to overtake BF-BOF in market share in the coming decades, global green hydrogen production capacity will have to increase substantially.
While legislation like the Inflation Reduction Act (IRA) in the US and Fit for 55 package in Europe provide much-needed financial support for developing the green hydrogen economy, challenges remain, particularly in scaling renewable energy capacity and connecting plants to the grid.
As a global leader in sustainable technologies, Hitachi Energy is focused on providing innovative products, solutions, and services to overcome these hurdles and accelerate the transition to a low-carbon future.
More information on Hitachi Energy’s hydrogen solutions here.
It’s time to accelerate the energy transition.