Swedish Hybrit hydrogen-for-steel project cuts costs 40% with storage

Swedish green hydrogen-for-steel project Hybrit has reduced hydrogen production costs by up to 40% using flexible storage to tap into low-cost grid power, while maintaining a steady hydrogen supply to end users.

The Hybrit collaboration between steelmaker SSAB, iron ore miner LKAB and power company Vattenfall tested hydrogen storage commercially on the electricity market for a month, cutting hydrogen production costs by 25%-40%, the group said Oct. 16.

"The mission was to produce hydrogen using fossil-free electricity at a variable electricity price with the lowest possible cost, for example during certain parts of the day or for longer periods when weather-dependent electricity generation was in good supply," Hybrit said.

In the test, Vattenfall bid in the approximately 5 MW of hydrogen production on the electricity market daily, sending the production plan to Hybrit, with a steady supply of hydrogen delivered to SSAB.

"During the test period, the spot price of electricity in the price area (SE1) was comparably low, on average around Eur20/MWh [$21/MWh]," Vattenfall head of industry decarbonization Mikael Nordlander told S&P Global Commodity Insights by email. "Using the electrolyzers and storage, the captured price for the hydrogen production was decreased by 25%. Since the full cost of hydrogen also includes the capital cost, the figures for a small pilot plant will not be representative."

Hybrit senior project manager Marie Anheden said the results of the test were "very good" despite the low power price volatility witnessed during the test period.

"By applying it in actual circumstances, we were able to follow in real time how much money was saved by using what was stored," Anheden said in the statement.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur8.04/kg ($8.47/kg) Oct. 13 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur9.31/kg.

The two alkaline electrolyzer units for the Hybrit pilot project are supplied by Norwegian manufacturer Nel. No technology selection has been made for future plants, Nordlander told S&P Global.

Storage potential

The 100 cu m steel-lined rock cavern pilot storage facility holds hydrogen gas pressurized up to 250 bar, located next to the Hybrit pilot plant in Lulea, Sweden.

Hybrit said the design of the storage facility proved to be well suited for rapid emptying and filling, interspersed with periods of less activity.

Nordlander said the results were encouraging for the future deployment of green hydrogen in industrial applications.

"Large-scale hydrogen storage makes it possible to adapt electricity consumption in a system of varying availability and prices and at the same time can supply the industry with hydrogen more stably and cost effectively," Nordlander said in the statement. "Used on a large scale, hydrogen storage can have a dampening effect on electricity price variations, which would favor investments in new electricity generation from all forms of fossil-free power."

At full scale, the facility could store 100,000-120,000 cu m of hydrogen, or around 100 GWh -- enough to power a full-size steel mill for up to four days, Hybrit said.

LKAB senior vice-president for energy and climate Stefan Savonen said his company would change the entire iron ore production process for fossil-free iron sponge using hydrogen, requiring over 1 million mt/year of the gas and 70 TWh a year of renewables by 2050, making cost reductions critical.

The storage facility started operations in 2022, with tests to continue to 2024.

The global steel industry accounts for 7%-8% of total CO2 emissions. The EU aims to become climate neutral by 2050, producing net-zero greenhouse gas emissions, making steel decarbonization in the region a priority.