Iberdrola and H2 Green Steel (H2GS, earlier post)have signed an agreement to build a plant with an electrolysis capacity of 1 GW. Green hydrogen from the new plant will power a direct reduced iron (DRI) furnace with a capacity to produce around 2 million tonnes per year of pure pig iron, which would allow the production of green steel with a 95% reduction of CO₂ emissions. The estimated investment is €2.3billion.

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 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 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. 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.

—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. With a budget of approximately €2 billion, the large-scale production of green hydrogen will contribute to the transition of heavy industry towards sustainable operations.

The joint venture was created following contacts facilitated by the European CEO Alliance initiative, in which H2 Green Steel and Iberdrola have joined forces with other companies to achieve a zero-carbon future and a more resilient and sustainable Europe. The CEO Alliance supports decarbonization efforts by identifying potential partnerships, encouraging green investments and deploying projects that advance the development of sustainable economies and societies, in line with the European Green Deal.

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 million tonnes of green hydrogen. The company is therefore accelerating the implementation of the entire hydrogen value chain.