Automakers and other industrial consumers have agreed to pay H2 Green Steel a premium of 20–30% for its low-carbon steel, according to Maria Persson Gulda, the Swedish company’s chief technology officer.

Buyers have agreed to take-or-pay contracts with durations of five to seven years, Gulda told an event to mark the 50th anniversary of the IEA.

The level of “green premium” paid by H2 Green Steel’s customers, and the duration of contracts, highlighted the readiness of automakers and others to pay for a low-carbon product as they attempt to decarbonise their supply chains.

The economics of H2 Green Steel—which uses green hydrogen in place of coking coal and is the first large-scale plant of its type—are helped by its access to low-cost, base load renewable power sourced from Sweden’s hydroelectric generation fleet. The steelmaker has a seven-year power supply deal with Swedish utility Statkraft.

5mt/yr – Target output in 2030

The Oxford Institute for Energy Studies recently estimated the average cost of producing green steel—whether through the use of hydrogen or the deployment of CCS—can be up to 50% higher than conventional production.

Gulda said H2 Green Steel’s deployment of various technologies has enabled it to enter the market at a competitive green premium.

“If you take technology from different industries but connected in a different way, you will be able to beat 95% [abatement], and at a price tag that is only 20–30% more than brown steel is today. But you need to put [the plant] where you have a large portion of renewable continuous electricity at a low price,” she said.

Bankable project

H2 Green Steel’s ability to secure offtake deals has enabled it to raise funding of €6.5b—€2b in equity and €4.5b in debt.

H2 Green Steel’s steelmaking complex in Boden, northern Sweden includes green hydrogen production based on electrolysers configured in 20MW modules, with a total installed capacity of more than 700MW.

The plant is on track to start production at a rate of 2.5mt/yr in 2026, rising to 5mt/yr by 2030. “We are fully executing at site, building at full pace,” Gulda said.

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Author: Stuart Penson