EWE and Salzgitter finalise green hydrogen supply contract

This marks a genuine milestone on the course to achieving a functioning hydrogen economy in Germany. The energy service provider EWE and Salzgitter Flachstahl GmbH, a subsidiary of Salzgitter AG, have concluded a long-term agreement on the supply of green hydrogen. The contract was signed today at the EWE representative office in Berlin together with Parliamentary State Secretary Gitta Connemann and Lower Saxony's Minister President Olaf Lies.

First major contract for green hydrogen from Emden

This is the first major purchase agreement for hydrogen from the 320 MW production plant that EWE is currently building in Emden and also marks Salzgitter AG's first major contract with a hydrogen supplier. The plan is to supply around 10 000 tpy via the hydrogen core network as from 2030. The contract, which runs for an initial term of seven years, will market a significant part of the first expansion stage of the plant in Emden and cover around 6.5% of SALCOS's hydrogen requirements. Further delivery volumes from EWE will therefore also be available for additional industrial partnerships.

The green hydrogen sourced from Emden is to be used in Salzgitter AG's SALCOS programme – Salzgitter Low CO₂ Steelmaking. In this context, the use of natural gas in a direct reduction plant is already capable of achieving a 60% reduction in CO₂ emissions compared to the blast furnace route with coal and coke.

However, Salzgitter AG's long-term goal remains the virtually climate-neutral production of steel, which can only be achieved through the use of green hydrogen. Water will be produced, instead of CO₂. In total, up to 150 000 tpy of hydrogen can be used in the direct reduction plant of the SALCOS program. Salzgitter AG will produce around 9000 t of this itself in a 100 MW electrolysis plant on its own steelworks site.

Ramping up the hydrogen economy in Germany, however, will require additional inputs and efforts. Further the implementation of additional measures is urgently called for in order to make renewable hydrogen an internationally competitive energy source. This includes, for example, the timely and reliable extension of the electricity price compensation for electrolysers and a prompt revision of the green electricity criteria for renewable hydrogen.

With the current supply contract, however, both companies are already entering into a long-term economic commitment on the producer and customer side. This is a strong signal for Lower Saxony as an industrial location: Industry is taking responsibility and concluding robust agreements well before the market for green hydrogen is fully established.

Gunnar Groebler, Chairman of the Executive Board of Salzgitter AG, said: “With the SALCOS programme, we are incrementally converting our steel production to a virtually CO₂-free route. The use of green hydrogen is a key component in this context. The contract with EWE represents an important step in this direction and strengthens our role as a frontrunner in the transformation of the steel industry. Once again, we have resolved a chicken-and-egg dilemma and made an important business decision. Without initial supply contracts, no German hydrogen economy will develop. However, this agreement is also linked to an urgent appeal to policymakers: The hydrogen ramp-up still faces major hurdles. Comprehensive measures are still needed to close the cost gap and minimize business risks. Otherwise, this contract will remain an exception.”

Stefan Dohler, CEO of EWE, commented: "A functioning hydrogen economy not only protects the climate. It also strengthens Europe's industrial resilience, makes us less dependent on fossil fuel imports and helps to keep energy competitive over the long term. This agreement is a milestone, but not yet the goal. It shows that supply and demand for green hydrogen can come together. At the same time, there are initial positive signals regarding the regulatory framework. Now we have to use this momentum, initiate further industrial partnerships and build up the market step by step. This will continue to require competitive electricity prices, practicable rules for green hydrogen as well as long-term investment security. Only then will individual projects become a viable market."

Read the article online at: https://www.globalhydrogenreview.com/hydrogen/10062026/ewe-and-salzgitter-finalise-green-hydrogen-supply-contract/