STEAG GmbH

In 2022, STEAG GmbH, Essen/Germany, brought around 2.5 GW of additional power plant capacity back onto the market. Of all the power plant operators, this was the biggest contribution to ensuring security of supply in Germany during the recent energy crisis. These plants are now being withdrawn from the market, but are to remain in the grid reserve.

When the supply situation in Germany and Europe was significantly tense in autumn and winter 2022 due to the Russian war of aggression against Ukraine, STEAG did not hesitate for long: in Saarland the Weiher (656 MW) and Bexbach (726 MW) power plants, the MKV (179 MW) and HKV (211 MW) units in Völklingen-Fenne and the Bergkamen power plant (717 MW) in the Ruhr region were made fit for market operation in a very short time and in a real tour de force by the workforce. All of this was done not least at the express request of the German government. “Since then, our hard coal-fired power plants have made an important contribution to ensuring security of supply,” emphasises Andreas Reichel, Chairman of the STEAG Management Board and Labour Director. “We can be proud of what we have achieved.” The Substitute Power Plant Provision Act (EKBG), which enabled the reserve power plants to return to the market for a limited period, is expiring, meaning that the five power generation plants provided by STEAG 18 months ago, with a total of 2.5 GW of power plant capacity, will be withdrawn from market operation again on 1st April 2024.

However, they will continue to make a significant contribution as part of the grid reserve: In March 2024, the Federal Network Agency (BNetzA) decided that the five STEAG Power power plant units in question are system-relevant. This means that STEAG, as the owner, is not allowed to switch off these plants, but must keep them permanently operational. In the opinion of the BNetzA, the four units in Saarland and the power plant in the Ruhr region are essential for grid stability.

Should it be necessary in the future, the transmission system operator Amprion could request these power plants with a short lead time to stabilise the electricity grids. “From now on, we will be working on the instructions of the grid operator,” Reichel continues. “This is good for security of supply in Germany. However, this model is not economically viable under the current rules.”

This is particularly evident in the case of the Weiher and Bexbach power plants in Saarland. The BNetzA first categorised these plants as system-relevant in April 2017. They then remained in the grid reserve until the end of October 2022 before they were allowed to temporarily return to market operation following the adoption of the EKBG. The BNetzA has now categorised both plants as systemically relevant once again – until the end of March 2031. “If this decision is upheld, we are talking about a system relevance of almost 13 years in the case of Bexbach and Weiher,” says Reichel. “The grid reserve is not intended for such a long period.” Strictly speaking, STEAG would be deprived of its ownership rights to the power plants for more than a decade. STEAG has therefore lodged an appeal against the BNetzA’s designation decision.

At the same time, the German government expects power plant operators to make considerable investments in the construction of new climate-neutral gas-fired power plants by 2030, which STEAG is also keen to do. Reichel is therefore calling for a new remuneration model (Figure 1). “With the current pure cost reimbursement for power plants in the grid reserve, we are a long way from appropriate remuneration for entrepreneurial activity. We must be able to earn money with the plants. Because only companies that generate profits are in a position to invest.”

For years, the STEAG Group has been making a significant contribution to a secure supply of electricity and heat in Germany. This should continue in the future: STEAG is therefore suggesting that the bridging function of the existing coal-fired power plants should be honoured. “With our young subsidiary Iqony, we are actively shaping the energy supply of tomorrow. In addition to the expansion in district heating supply, this also includes the construction of new hydrogen-capable gas-fired power plants. Our power plant sites offer ideal conditions for these energy transition projects thanks to the existing infrastructure and highly qualified power plant teams,” summarises Reichel. (STEAG/Si.)

Hard coal-fired power generation has been a tradition in Herne/Germany since the 1960s. Back then, the first power plant unit, Herne 1, went into operation. STEAG GmbH, Essen/Germany, continued this tradition with the commissioning of unit Herne 4 in 1989 – and continues to do so today. The plant, with a net generation capacity of 460 MW, can supply more than 1.1 M four-person households with electricity around the clock for a whole year. The combined heat and power plant, which operates on the principle of cogeneration, is also an important source of heat for the Ruhr district heating network. “Herne 4 has always served us very well. My special thanks go to the power plant team on site, who have made a safe and reliable contribution to the security of supply in the region for 35 years,” says Andreas Reichel, Chairman of the Board of Management and Labour Director of the STEAG Board of Management.

As part of the company’s own transformation, the STEAG Group is aiming for climate neutrality by 2040. Due in particular to the sharp drop in electricity prices, which have fallen by around 40 % compared to October 2023, STEAG is now applying to decommission the Herne 4 power plant by March 2025 (Figure 1).

“Of course, this is not an easy step for us. But it is necessary in order to preserve the regained economic strength of the company as a whole,” adds Reichel. The decommissioning of Herne 4 was originally planned for spring 2022. Due to the changed situation on the electricity and gas market following the start of the Russian war of aggression against Ukraine, STEAG postponed the decommissioning at the time, thereby contributing to greater security of supply, particularly in the critical winter of 2022/23.

With the neighbouring Herne 6 combined cycle gas turbine power plant (CCGT), which STEAG subsidiary Iqony commissioned at the same site in autumn 2022, the supply of electricity and district heating will also be secured in the future. In future, the waste heat from industrial companies in the region will also be used as an additional heat source for a green district heating supply in the Ruhr region.

This means that little will change for the employees on site for the time being. “In addition, the new Herne 6 CCGT at the Herne site offers good employment opportunities for our highly qualified and motivated power plant team,” emphasises Reichel. Herne will remain an important energy location in the Ruhr region in the future. (STEAG/Si.)

At the full works council and delegates’ conference of the STEAG Group (Figure 1), Essen/Germany, Andreas Reichel, Chairman of the Management Board and Labor Director, made it clear that the forthcoming sale of the energy group to the Spanish infrastructure investor Asterion Industrial Partners means more scope for STEAG in shaping the energy and heat transition.

Speaking to the participants at the full works council and delegates’ conference at the Zollverein industrial heritage site in Essen, Reichel explained the future direction of the energy group: “The sale of STEAG GmbH together with its two subsidiaries Iqony and STEAG Power to Asterion, which is expected to be finally closed in December 2023, is a very good signal for the around 5,300 employees and for the energy sector in Germany as a whole. Together with our future owner, we now have the potential to invest significantly in expanding our holistic solutions for decarbonization, decentralization and digitalization of the energy supply.”

At the end of August 2023, Asterion had announced its intention to invest around 1 bn € in the STEAG Group’s green growth business, which is bundled under the umbrella of the new subsidiary Iqony, once the takeover has been completed. “Our lighthouse projects include, e. g., the “HydrOxy Hub” project at the Duisburg-Walsum power plant site, where we intend to produce large quantities of green hydrogen in an electrolyzer with a capacity of up to 520 MW,” says Reichel.

Likewise, projects for the construction of several new gas-fired power plants with hydrogen capability are among the future investment priorities. “For that, however, we will need an appropriate political framework, faster approval procedures and firm legislation as rapidly as possible,” Reichel appealed. This applies all the more, he said, as the German government itself has set a target of building new gas-fired power plants with a generation capacity of up to 25 GW by 2030. “If we want to achieve this in that short time, we must have clarity quickly,” Reichel added.

Gerhard Grabmeier, Chairman of STEAG’s General Works Council, made it clear in his speech that a new growth phase would begin for STEAG with Asterion as the owner: “Asterion wants to invest more in the green technologies of the future. This will ensure good and reliable employment prospects in the company and increase the attractiveness of the Group as an employer. The team at Iqony has what it takes to play a key role in shaping the energy transition in Germany and Europe.”

In addition to growth in sustainable future fields, STEAG also stands for security of supply as provided by the large power plants of the Group subsidiary STEAG Power. “The past winter in particular, when no more Russian gas flowed through the pipelines to Western Europe, has shown that you can rely on the people at STEAG!” commends Michael Vassiliadis, Chairman of the Mining, Chemical and Energy Industrial Union (IGBCE) and member of the Supervisory Board of STEAG.

STEAG Power returned 2.5 GW of generation capacity to the market in November 2023, making a decisive contribution to significantly reducing natural gas consumption in power generation. “What is needed now for the future is reliability from politicians. We need more planning certainty and a reliable power plant strategy from the German government. There needs to be security for the electricity market and a new market design in which power plant operators also receive money for keeping power generation capacities permanently available – even when they are not currently connected to the grid,” Vassiliadis demands. However, STEAG remains committed to its goal of phasing out coal-fired power generation in Germany by mid-2026. (STEAG/Si.)

At its meeting on 25th January 2023, the Supervisory Board of STEAG GmbH, Essen/Germany, appointed Ralf Schiele (Figure 1) as a member of the Management Board of STEAG GmbH for a further three years. Schiele has been a member of the STEAG management since October 2020 and is responsible for the Market and Technology division. His appointment as Chief Operating Officer (COO) now runs until the end of September 2026. Schiele has worked for the STEAG Group for 20 years. Andreas Reichel, who is Chairman of the Management Board of STEAG GmbH and HR Director, had already been reappointed in 2022 with effect until the end of July 2026.

STEAG GmbH has been acting as the holding company of the STEAG Group since the beginning of 2023. STEAG has grouped the green growth businesses of the Essen-based energy company together in the new Iqony GmbH, which was launched on 1st January 2023. In the new setup, STEAG’s traditional coal business operates under the umbrella of STEAG Power GmbH. The three STEAG directors Reichel, Schiele and Ralf Schmitz are also directors of the subsidiaries Iqony GmbH and STEAG Power GmbH. (STEAG/Si.)

STEAG GmbH’s Supervisory Board has a new Chairman: Ewald Woste, an experienced and accomplished industry expert who has worked in the energy sector for 30 years, was unanimously elected on 8th December 2022 by the 20 members of the board.

Woste will take up the post in a landmark phase for the energy company: Following the division of the STEAG Group, Essen/Germany, into a coal business and a green growth business, the process of selling the company as a whole will be launched at the beginning of 2023.

In electing Woste, the Supervisory Board followed a proposal from Dortmund. “Ewald Woste is a proven expert in the energy sector, he has a large network and will not need any time to prepare himself for his role as Chairman of STEAG’s Supervisory Board,” said Guntram Pehlke, Chairman of the Management Board of DSW21, the largest indirect shareholder in STEAG with 36 %. The sole owner of STEAG is Kommunale Beteiligungsgesellschaft KSBG. Its shareholders are six Ruhr district municipal utilities. “The interests of the local authorities behind the municipal utilities are in the best of hands for the upcoming sale process with Mr. Woste,” Pehlke added.

At the meeting, the Supervisory Board also extended the appointment of Ralf Schmitz as Chief Transformation Officer (CTO) and member of the Management Board of STEAG by one year. In addition to transformation, Schmitz is also responsible for the operational management of the sale process at STEAG.

“We are entering 2023, a crucial year for STEAG, with a good lineup of personnel,” emphasized Dietmar Spohn, CEO of Stadtwerke Bochum, on behalf of the municipal shareholders. “The agreement now reached was also possible because all those involved were prepared to put aside their personal interests and keep the big picture in view. We will now systematically press ahead with the sale of STEAG.”

Woste succeeds Gerhard Jochum, who has resigned as Chairman of the Supervisory Board of STEAG GmbH. (STEAG/Si.)

STEAG GmbH, Essen/Germany, is returning both its hard coal fired power plants Bexbach and Weiher in Saarland from the grid reserve to the market. With a net rated capacity of 726 MW, the Bexbach power plant (Figure 1) is the largest STEAG plant in Germany, it’s sister power plant in Weiher has a capacity of 656 MW. Together, both power plants reliably supply the equivalent of up to four million households with electricity. Furthermore, STEAG has decided to keep the power plants Bergkamen (717 MW) in the Ruhr area as well as the power plant blocks MKV (179 MW) and HKV (211 MW) in Völklingen-Fenne, Saarland, who originally were designated for permanent decommission by 31st October 2022, further in the market. The energy company has informed the Federal Grid Agency (Bundesnetzagentur) and transmission grid-operator Amprion about these decisions taken. Power Exchange EEX has been informed, too.

“We as STEAG can make a significant contribution to save natural gas within the current energy crisis,” says Andreas Reichel, Chairman of the Management Board of STEAG. Altogether, the four power plants in the Saarland and Ruhr area now returning to the market and which are affected by the exemptions of the Act on the Maintenance of Substitute Power Stations (EKBG), have a net rated capacity just under 2,500 MW.

“Arithmetically, our power plants can replace approximately a third of the power, that in 2021 had been generated in natural gas fired power plants,” adds Ralf Schiele, COO of STEAG, responsible for “market and technology” within the management board.

The first of the four power plants to return to the market was Bexbach on 28th October 2022; thereby fulfilling its designated task within the current energy crisis: reduce natural gas consumption in power generation. Its sister power plant Weiher, located in the Saarland town of Quierschied, followed on 31st October 2022. Both the two power plants Bergkamen and Völklingen-Fenne, originally designated for permanent decommission, stay in the market beyond 30th October 2022. All of the four power plants are planned to operate in the market until spring 2024 within the legal framework of the EKBG.

This became possible thanks to the efforts to secure a sufficient hard coal supply. “The past few weeks have been stressful and challenging for our employees,” says Reichel. Together with logistics service providers and the German government, solutions have been found to overcome the existing transport bottlenecks on the railways. “In the upshot, we are very relieved that the federal government has taken the right course here,” says Reichel.

The new arrangement provides for fuel transport by rail to be given priority over other rail traffic whenever the permanent operation of a power plant can otherwise no longer be guaranteed. Since the beginning of October, STEAG has been able to build up the fuel stocks needed for a return to the market, which are much larger than for reserve operations.

Originally, theEKBG even stipulated a fuel quantity that would be sufficient to operate the plants at full load for 30 days. In the view of power plant operators, this minimum stockpiling requirement, which is far removed from practice, has now been significantly relaxed by the German government. Since the passage of the EKBG into law in July, only two hard coal fired power plants have returned to the market.

“Without the demand-based priority regulation for hard coal transport over other rail traffic, the earlier return of the Bexbach power plant to the market would hardly have been possible,” Schiele sums up the demanding logistical starting point for the power plants.

Indeed, the rail freight system was not prepared for a restart of hard coal fired power plants after the phase-out of coal-fired power generation in Germany, which was enshrined in law in 2020. “Transport companies and rail operators had adjusted their capacity of locomotives, warehouses and wagons to reflect the new market situation. As a result, there is also currently a shortage of traindrivers. If a reliable fuel supply for the hard coal fired power plants was to be organized and security of electricity supply ensured in the current energy crisis,the tasks involved were and still are highly challenging,” Stephan Riezler, who heads STEAG’s trading department and is responsible for fuel management in that function, explains.

The situation was aggravated by the fact that, e. g., with regard to the Bergkamen power plant site, which is supplied by ship, the low water levels of the rivers also caused a tense supply situation into the autumn. “In the case of inland shipping, too, less transport capacity has been available recently following the decision to phase out coal. Thankfully, however, the situation has eased here due to the recent rise in river levels,” says Riezler. The supply of STEAG’s power plant sites supplied by ship is therefore secured.

Ensuring reliable transport logistics from the international ports of Rotterdam and Amsterdam to the power plant sites in Saarland was just one of several challenges that STEAG had to overcome in the past few weeks.

Especially, the two power plants Bergkamen and Völklingen-Fenne had to be technically overhauled. At the same time, it was necessary to ensure that sufficient personnel would be available at both sites beyond the designated decommissioning date to be able to operate the power plants as required. “Retirements were postponed, we were able to persuade employees who had changed their careers to stay on, and we recruited new staff – as far as they were available on the labor market,” says Reichel, who also holds the position of Labour Director at STEAG.

Thanks to these measures, the continued operation of the Bergkamen and Völklingen-Fenne power plants could also be secured in terms of personnel. However, the staffing level at the Völklingen-Fenne site did not allow for double-unit operation. “Therefore, only one of the two units will be on the grid at the Völklingen-Fenne site at a time,” says Ralf Schiele.

The fact that the market return of Bexbach and Weiher as well as the market retention of Bergkamen and Völklingen-Fenne is now succeeding in time for the start of the heating season despite all organizational adversities is the result of a united team effort by the STEAG workforce. “STEAG and its employees are justifiably proud of this success,” adds Reichel. (STEAG/Si.)

STEAG GmbH, Essen/Germany, sells a large part of the shares in its power plant on the Philippine island of Mindanao. The buyer is co-shareholder Aboitiz Power Corp (APC). STEAG had already announced last year that it wanted to sell its stake and initiated a sales process. As part of this process, Aboitiz has now exercised its right of first refusal.

The corresponding contracts were ceremonially signed on 19th October 2022 by the management of both contracting parties in Essen after the formal signing had already taken place on 15th September 2022 (Figure 1). The final closing of the transaction, which has a value of around 36 M US$, is still formally subject to the approval of several indirectly involved contractual partners and Philippine authorities.

“With the sale, STEAG is taking another important step on the way to complete decarbonization of the Group,” says Ralf Schiele, who is responsible for the Market and Technology divisions on the STEAG Management Board. The goal that STEAG has set itself is to become climate-neutral by 2037. The date has not been chosen arbitrarily: In 2037 STEAG will celebrate its one hundredth birthday.

For the time being, however, STEAG will remain a minority shareholder in STEAG State Power Inc. (SPI), the operating company of the Mindanao power plant. “Since the second co-shareholder, La Filipina Uy Gongco Corporation, has not exercised its proportional right of first refusal, we continue to hold around 15 % of the operating company, but are still keen to sell this minority share as well,” says Schiele.

However, STEAG will only remain invested in Mindanao until 2031 at the longest, as a build-operate-transfer model provided for the transfer of ownership of the power plant to the state-owned utility and grid operator Power Sector Assets and Liabilities Management Corporation (PSALM) from the very beginning. (STEAG/Si.)

Part of the demonstration deliveries of carbon-reduced ammonia agreed in spring between the Abu Dhabi National Oil Company (ADNOC) and various German energy and chemical companies has arrived in Hamburg; the tranche destined for STEAG GmbH, Essen/Germany, will follow timely. Representatives of ADNOC, STEAG and other companies as well as government representatives of the United Arab Emirates and the Federal Republic of Germany met in Hamburg to mark the occasion (Figure 1). The aim was not only to take stock, but also to discuss options for further cooperation. ADNOC and STEAG are currently negotiating an expansion of their cooperation.

“We are very pleased that the cooperation that began in the spring has developed so positively within such a short time,” says Andreas Reichel, CEO of STEAG. Especially in the face of the current crisis on the energy markets, this shows the declared will of the partners to quickly find solutions to secure the energy supply in the long term while not losing sight of the needs of climate protection.

For STEAG, ammonia offers various options for use: “On the one hand, ammonia is used in our hard coal-fired power plants in the denitrification of flue gases,” explains Ralf Schiele, who is responsible for the Market and Technology divisions in the STEAG management. In denitrification, ammonia is added to the flue gases, which then reacts with the nitrogen oxides contained in the flue gas to form water and nitrogen, thus purifying the flue gases.

“In addition, ammonia can also be a transport medium for hydrogen,“ Schiele continues. By means of the well-known Haber-Bosch process, ammonia can be produced synthetically from hydrogen and nitrogen. “Since the transport of ammonia is much easier than that of hydrogen, the material diversions via ammonia is a thoroughly sensible alternative,” says Schiele. The ammonia can then be split into the components nitrogen and hydrogen again at the customer’s production plant.

In view of the broad range of applications for ammonia, particularly in industry and energy generation, ADNOC and STEAG, together with other potential partners, are holding talks on intensifying the cooperation that was agreed during a delegation trip by Federal Minister of Economics and Climate Action Robert Habeck to the United Arab Emirates in March 2022. “It is now generally recognised that hydrogen is the key element for a successful energy transition. Consequently, STEAG is developing projects for green hydrogen production by means of electrolysis on an industrial scale at two locations,” says Reichel. However, in view of the foreseeably high demand for hydrogen, it is necessary to import hydrogen in addition to producing it domestically in order to meet the needs of customers in the long term.

Talks between the two partners are ongoing. “As soon as there is something concrete to report, we will of course make a statement,” said Reichel. At the same time, he thanked Federal Minister of Economics Habeck, whose delegation trip provided the initial impetus for the deepened cooperation that is now taking shape. (STEAG/Si.)

The STEAG Group, Essen/Germany, can look back on a successful six-month period. In the first half of the current business year, the energy group achieved consolidated sales of 2.41 bn €. Earnings before interest and taxes improved to 386.1 M €, almost doubling the result for the entire previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) also increased significantly to 450 M €. “At the end of the first half of fiscal 2022, we are well ahead of our budget in all the relevant key figures and also well above the values for the entire previous year,” emphasizes Andreas Reichel, Chairman of the Management Board of STEAG GmbH.

The significant economic stabilization of the long-established energy company can be attributed to the power plant business, which improved disproportionately compared with the growth business in renewables in the first six months of 2022. The power plants in Germany have been in the black since September 2021. Just under a year ago, an unexpected price rally on the natural gas market caused electricity prices to rise for the first time. The situation on the energy markets tightened even further with the Russian war of aggression in Ukraine and the drastic reduction in Russian natural gas supplies to Europe that followed shortly afterwards.

The end of coal-fired power generation in Germany, which has been enshrined in law since 2020, had placed an enormous burden on STEAG. In the 2020 balance sheet, the company had to absorb considerable impairments in relation toits domestic power plants and additionally high redundancy package costs for the loss of around 1,000 jobs in the Group.

“Now, thanks above all to the sound profits at the domestic power plants, we are again in a financial position to invest heavily in the expansion of STEAG’s green growth business, which employs around 2,500 people,” clarifies Ralf Schiele, Director for Market and Technology at STEAG. “We can offer these people good and secure prospects and, with the technical and energy market expertise we have acquired over eight decades, play a powerful role as an enabler of the energy transition.”

This is because the STEAG balance sheet has also become significantly stronger in the 2022 business year. Group equity, which was only slightly positive at 0.6 M € at the end of 2021, increased to 304 M € at the end of June 2022. At the same time, net financial debt fell to 303 M € – down from 485 M € at the end of 2021. “Our net gearing, expressed as the ratio of net financial debt to EBITDA, is currently well below one. That is a rock-solid figure,” according to Ralf Schmitz, Chief Transformation Officer and Chief Financial Officer of STEAG. The sharp rise in interest rates on the capital market also meant that accruals for pensions fell to below 900 M € – compared with just under 1.23 bn € at the end of 2021.

The medium-term business prospects for STEAG are also good. With the German Act on the Maintenance of Substitute Power Stations (EKBG), which recently came into force, the government is attempting to reduce Germany’s dangerous dependence on energy imports from Russia and to replace natural gas in electricity generation primarily with hard coal. The EKBG opens up the prospect for STEAG of continuing to operate four hard coal units profitably on the market until spring 2024.

STEAG is also making a significant contribution to the success of the energy transition. On the one hand, the company is ensuring reliable energy supplies so that the economy and society are not plunged into a crisis, especially this winter; on the other hand, STEAG is pressing ahead with projects in energy from renewables, hydrogen production and the decarbonization of industry. In addition to the major hydrogen projects in Duisburg-Walsum and Völklingen-Fenne, these include a large-scale battery project at a STEAG site and the utilization of waste heat from a waste treatment plant in the Saarland for the region’s district heating supply.

“STEAG is needed in the current energy crisis. That is why we have the firm intention of taking two hard coal fired power plants out of the grid reserve as provided for by the EKBG and keeping two further plants that were already on the verge of being decommissioned on line for longer. A total of 2,300 MW of power plant capacity will therefore be ready for operation and available on the market by November 2022 at the latest. No other power plant operator can make such a large contribution to gas savings,” emphasizes Reichel.

“STEAG alone can generate around a quarter of the energy previously generated in gas-fired power plants by returning its plants to the market,” Ralf Schiele adds.

The current business development does not change the fundamental decision by the STEAG shareholders to dispose of their holdings – on the contrary: In autumn 2021 the shareholders had already declared their long-term intention to withdraw from their involvement in STEAG. Now they have announced that they will bring forward the process of selling STEAG as a whole because of the good industry environment at the present time. “We are first sounding out the market to identify interest from potential purchasers. The findings from that will flow into our further deliberations and those of our municipal shareholders. Our task as the STEAG management is to enable our owners to sell their shares at an appropriate price in 2023,” emphasizes Schmitz. The actual sale process is expected to start in the autumn of 2022. (STEAG/Si.)

HydrOxy Walsum, STEAG’s hydrogen project in Duisburg, North Rhine-Westphalia, is taking shape: Based on a favorable feasibility study for a water electrolysis plant with a capacity of up to 520 MW, jointly prepared by the project partners STEAG GmbH, Essen/Germany, and thyssenkrupp Steel AG, Duisburg/Germany, an agreement in the form of a memorandum of understanding has now been reached on the planned delivery of hydrogen and oxygen to thyssenkrupp Steel from the neighboring STEAG site in Duisburg-Walsum (Figure 1).

This will see the planned water electrolysis facility making an important contribution to the decarbonization of Europe’s largest steelmaking site. “Hydrogen is playing an increasingly important role in the energy transition,” says Ralf Schiele, STEAG director with responsibility for Market and Technology. He points out that hydrogen offers the opportunity to avoid CO₂ emissions in industry, the mobility sector and the energy industry, and thereby to achieve the targeted climate goals.

In the case of the steel industry, hydrogen and oxygen, which is automatically produced as a by-product during synthetic hydrogen production, mean that the use of carbon-rich coke can be dispensed within iron production in the future. “Our goal is to make thyssenkrupp Steel climate neutral by 2045. As an interim step, we are already aiming to significantly reduce our emissions by 30 % by 2030,” says Marie Jaroni, Head of Decarbonization at thyssenkrupp Steel. STEAG’s planned water electrolysis in Walsum will make an important contribution to achieving these ambitious goals, she adds.

With the agreement that has now been reached, the large-scale project is entering its next phase: “The positive outcome of the feasibility study and the plan for thyssenkrupp Steel to purchase a large proportion of the hydrogen generated in Walsum in the future mean we can start drumming up funding and private investment capital,” says Karl Resch, who negotiated the memorandum of understanding with thyssenkrupp on behalf of STEAG. The signing of the agreement thus marks an important milestone on the road to implementing the project, he remarks.

For STEAG itself, the agreement reached is not merely an important step towards implementing an ambitious energy project. “By guiding the “HydrOxy Walsum” project step by step to success, we are also continuing to drive forward the successful transformation of the STEAG Group as a whole,” Andreas Reichel, Chairman of STEAG’s Board of Management emphasizes. In the course of the coming twelve months, Germany’s formerly biggest producer of power from hard coal will have completed its own coal phase-out to a large extent. At the same time, STEAG is successfully realigning itself to the future growth areas in the energy industry, i. e. with ambitious hydrogen projects in the Ruhr and Saar regions and the almost completed new-build project for a combined cycle gas turbine power plant in Herne.

The investment decision for the water electrolysis project with an installed capacity of up to 520 MW at the Walsum site is expected to be taken by 2023 at the latest, with delivery to thyssenkrupp Steel planned to start in 2025. “We will then put a so-called direct reduction facility into operation on the thyssenkrupp Steel site in Duisburg. This will enable iron to be produced with almost zero emissions using hydrogen rather than by burning coke in a blast furnace,” Jaroni explains.

STEAG guarantees that the hydrogen produced in Walsum will be “green”, or in other words climate neutral. “The water electrolysis will operate entirely with electricity generated from renewable sources. This will enable zero-carbon hydrogen production, which means the steel produced using our hydrogen will also be climate neutral when viewed across the entire value chain,” says Schiele. (STEAG/Si.)