2023-05-27 04:00:10
ArcelorMittal intends to invest more than one billion euros to decarbonise part of its steel head in Gijón with the use of green hydrogen instead of coal. However, the company has made it clear that it will initially use other gases of fossil origin until hydrogen is “commercially sustainable”, that is, until its price is “competitive” with respect to natural gas. For this, there is a long way to go. This week the first hydrogen index based on prices traded in the market was launched and the price of renewable hydrogen is almost eight times that of natural gas.
The European Energy Exchange (EEX) is considered the main energy exchange in Europe and has launched this week the Hydrix index, which provides weekly information on the prices of green hydrogen traded in the markets, taking into account the supply of the energy sector and industry demand.
“Hydrix closes a price signal gap and is critical to market growth and further investment in the hydrogen economy. With an index based on commercial hydrogen market prices, we are providing a benchmark that can be used for investment decisions. We are therefore paving the way for the zero-carbon future of the energy industry,” said Peter Reitz, CEO of EEX.
The first Hydrix index, published this week, places the price of green hydrogen at 231.6 euros per megawatt hour for week 19 of the year, at 226.2 euros for week 20, at 222.8 euros for week 21 and at 228.164 euros for week 22. This first global price reference for green hydrogen would not be excessively bulky if compared with the prices of natural gas last summer, when it reached peaks of 340 euros. However, it is now at levels prior to the invasion of Ukraine and these days natural gas is trading on the European reference market – the TTF of the Netherlands – below 30 euros. In other words, the price of green hydrogen multiplies almost eight times that of natural gas.
Companies like ArcelorMittal are very aware of the evolution of the price of green hydrogen. The steel multinational intends to give the final go-ahead in the coming weeks to an investment of more than one billion euros to decarbonise part of the Gijón steel head, with the replacement of one of the two blast furnaces with a direct reduction plant of iron ore (DRI system) using green hydrogen and a hybrid electric arc furnace powered by renewable energy. However, the DRI plant project is already expected to initially use natural gas as a reducing agent until green hydrogen “becomes available in a commercially sustainable manner”, until its price is “competitive” with respect to natural gas.
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