Flexibility options in a decarbonising iron and steel industry

Abstract

The decarbonisation of the iron and steel industry is expected to significantly increase its electricity consumption due to higher levels of electrification and the partial shift to hydrogen as iron reductant. With its batch processes, this industry offers large potential for the application of demand response strategies to achieve electricity cost savings. Previous research has primarily focused on investigating the demand response potential for currently operating manufacturing processes and partly for future low-carbon processes. This study aims to consolidate this knowledge and apply it to a modelling analysis that investigates the demand response potential of two new low-carbon technologies: the hydrogen-based direct reduction of iron with electric arc furnace technology (H2-DRI-EAF) and the blast furnace basic oxygen furnace technology retrofitted with carbon capture (BF-BOF-CCUS). A cost optimisation approach is applied to plant configurations with varying parameters relevant for flexibility, such as electrolyser and storage sizes, and in the context of future electricity prices. Multiple price profiles are selected to encompass uncertainties on the development of the power system. The potential for a H2-DRI-EAF plant is 3–27 times higher than for a BF-BOF-CCUS, with electricity costs savings potentials of 35% and 3%, respectively. The study finds that electricity prices have the most significant impact on the profitability of investing in electrolyser overcapacities, which enable operating costs reduction. Therefore, the profitability of these investments are strongly dependent on future power system configurations.