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How to make better use of green electricity as a carbon reduction tool? -- Side note of the seminar on "Strategy Analysis of Expanding green Electricity Consumption in China's Steel Industry"

"China will further implement the replacement of renewable energy consumption and comprehensively promote the electrification process of terminal energy consumption." In order to adapt to the transformation of energy use, the proportion of electricity and hydrogen in the future terminal energy will continue to increase.

"Expanding the use of green electricity, especially photovoltaic and wind power, is one of the key means of carbon reduction."

"Steel, especially in short-process steel, has a very large potential for flexible regulation to participate in grid interaction."

...

On August 22, the Natural Resources Defense Council (NRDC) organized the "China's steel industry to expand green electricity consumption strategy analysis" seminar was held in Beijing, from the steel, power industry experts, scholars around the steel industry green electricity application, development potential, facing challenges and other topics were discussed.

01
In the future, the steel industry will rely more on green electricity consumption

Wind power, solar power generation, hydropower, biomass power generation, geothermal power generation, ocean power generation and other renewable energy in the power generation process does not produce or rarely produce harmful emissions to the environment (such as carbon dioxide, sulfur dioxide, nitrogen oxides, etc.), and does not need to consume fossil fuels, compared with conventional fossil energy power generation is more conducive to environmental protection and sustainable development. So it is called green electricity, green electricity for short. Green electricity is an effective way to reduce carbon in the steel industry has become an industry consensus.

Zhao Lei, deputy director of the Development Research Department of the Economic Development Research Center of the metallurgical industry, said that at present, China's steel long process accounts for 90%, and short process accounts for only 10%; The long process has high coal consumption and low power consumption, while the short process is dominated by power consumption. However, in the long run, under the background of "dual carbon", the deep decarbonization of the steel industry will inevitably require the proportion of long processes to be continuously reduced, and the proportion of short processes such as hydrogen-based shaft furnace + electric furnace and all scrap steel + electric furnace will be greatly increased. At that time, the power consumption structure of the steel industry will change significantly, and the steel industry, as a consumer and user side, will be more dependent on the economic stability of green electricity supply.

Li Kejiang, a professor at the University of Science and Technology Beijing, looked ahead to the "uncertainty" and "possible disruption" of the future application of green electricity in the steel industry. On the one hand, if the future green electricity can really be cheap enough and abundant enough as many people expect, it may give rise to a lot of new technologies, new processes and new processes that are not expected now, and the energy consumption and reduction function of the entire steel production process may be completely based on green electricity, so sufficient and cheap green electricity may have a "disruptive impact" on the entire steel industry. But on the other hand, there are more and more scenarios that need to be based on green electricity in the future, such as emerging industries such as artificial intelligence and intelligent manufacturing, which are large power consumers, and large-scale energy storage and power transmission may also increase costs, which also brings "uncertainty" to whether green electricity can achieve low cost and sufficient supply. In any case, as long as the human "carbon neutral" goal is adhered to, it will inevitably require all walks of life to improve the penetration rate of new energy, and the proportion of green electricity consumption in the steel industry will gradually increase.

In the view of Gong Feixiang, a researcher at the China Electric Power Research Institute, green electricity may also directly affect the pricing and trading of commodities in the future. He explained that the recent policy issued by the National Development and Reform Commission requires the green electricity utilization rate of the electrolytic aluminum industry to exceed 70%, which indicates that the national level has been very positive about the important role of energy-consuming industries in green electricity consumption. This sets up a trend where green electricity has the potential to have a direct impact on commodity markets in the future.

Lin Mingche, director of the Climate and Energy program at the Natural Resources Defense Council (NRDC), said the steel industry's contribution is crucial in achieving the nation's "two-carbon" goal. In the future, the power supply will be dominated by green electricity, and the steel industry as a key energy use industry should also exert force from the demand side, develop in synergy with the power industry, and jointly promote low-carbon transformation.

02
The main mode of green electricity application in steel industry

In recent years, domestic iron and steel enterprises have promoted the application of green electricity through five main modes: green electricity trading, photovoltaic power generation, wind power generation, new energy storage, and industrial green microgrid.

Baosteel has started green electricity trading since 2018, and the purchase of green electricity has increased year by year, with a total of 1.028 billion KWH of green electricity transactions completed in 2023. Among them, Baosteel shares participated in the spot market centralized bidding transactions, and realized that the price of some purchased green power was lower than the price of thermal power.

During the "14th Five-Year Plan" period, Jiusteel Group plans to build 1000MW photovoltaic power generation project. Up to now, JISCO Group has achieved 200MW centralized photovoltaic power generation and 30MW distributed photovoltaic power generation connected to the grid.

Located in the east coast of Bohai Bay, Ansteel Bayuquan Steel Branch is rich in wind power resources. The company started the distributed wind power generation project in the early stage of construction (2008). The current installed capacity is 16MW, and the average annual generating capacity is 15 million KWH.

On May 25, 2023, Nangang started to build an energy storage power station with an installed capacity of 61MW/123MWh (rated total output power of 61MW, total capacity of 123MW), and realized 72-hour full capacity grid-connected operation on January 15, 2024, with two charges and two discharge per day. This is the largest user-side energy storage project with the largest single capacity in China, and the largest industrial and commercial energy storage project with advanced cluster energy storage system in the country, and has a significant demonstration effect in the steel industry and the user side.

Zhongtian Iron and Steel Group (Nantong) industrial green microgrid has been built, and selected as the typical application scenarios and cases of industrial green microgrid in the steel industry of the Ministry of Industry and Information Technology. After the operation of Zhongtian Nantong microgrid, it can achieve economic benefits of about 10 million yuan per year (excluding the income from self-generated electricity of enterprises).

Zhao Lei pointed out that for all steel enterprises, these five application models are feasible, and need to be considered according to the regional green power resources, solar energy resources, wind energy resources and peak-valley electricity price difference. At present, for most steel companies, the best feasible model for green power application is to participate in green power market trading + adopt a contract energy management model to build distributed photovoltaic power generation and/or distributed wind power generation.

03
Expanding green electricity consumption requires multiple efforts

At present, the steel industry is still facing many challenges to expand green electricity consumption. Experts and scholars believe that this requires the efforts of the government, industry and enterprises.

Li Wenxiu, honorary member of the Expert Committee of the Chinese Society of Metals, said that the steel industry to expand the application of green electricity, to distinguish its impact on different process structures, short process and green electricity connection should be faster, looking forward to the industry and enterprises to develop more low-carbon process technology similar to hydrogen metallurgy, which is also a promotion of the expansion of green electricity consumption.

Jiang Feittao, director of the Industrial Integration Research Office of the Institute of Industrial Economics of the Chinese Academy of Social Sciences, suggested that the government should further increase its support for the construction of centralized photovoltaic and wind power in steel enterprises' factories and surrounding areas, as well as supporting energy storage facilities and microgrid construction.

Gong Feifei pointed out that the future participation of steel enterprises in the power grid auxiliary service market through flexible load is worthy of attention, which requires the design of some better win-win trading mechanisms.

Zhao Guisheng, deputy general manager of Hesteel Group Electricity Sales Company, introduced the practice and planning of Hesteel's direct trading of green electricity from the perspective of power market practitioners in the steel industry. He said that it is urgent for the industry to establish green steel standards, transmit the green electricity premium to the steel price, form a closed loop price, and improve the economy of green electricity applications. At the same time, the country needs to improve the current electricity market trading mechanism, improve the enthusiasm of enterprises to consume green electricity.