Two German Steel Producers to Buy Electricity from Baltic Eagle Offshore Wind Farm

Business & Finance

June 20, 2023, by Adrijana Buljan

Iberdrola Deutschland and SHS – Stahl Holding Saar, an operational management holding company that performs tasks for the two major steel companies in the German state of Saarland, Dillinger and Saarstahl, have signed a 15-year power purchase agreement (PPA) for the Baltic Eagle offshore wind farm.

Under the PPA, SHS will cover 200 GWh of annual electricity consumption of the two steel companies with around 50 MW of generation capacity from the 476 MW Baltic Eagle offshore wind farm, which will be used in the production of low-CO2 steel in the Saarland steel industry.

In addition to the PPA, Iberdrola and SHS are also exploring other opportunities for cooperation, such as on-site renewable energy and the production of green hydrogen.

For Saarstahl and Dillinger, this is the first of several PPAs planned for the coming years as part of their plans to decarbonise steel production and operations.

Back in December 2022, the supervisory boards of SHS and the two steel producers made a joint decision to invest EUR 3.5 billion to transform the steel industry in Saarland and enable the production of green steel.

The investment is planned to support the production of up to 3.5 million tonnes of low-carbon steel annually and the reduction of carbon emissions by 4.9 million tonnes, starting in 2027.

“With the conclusion of this PPA, we are taking a big step towards our goal of climate-neutral steel production. Our cooperation with Iberdrola helps us to secure renewable electricity for the transformation process of our companies Saarstahl and Dillinger. Currently, our production is still based on classic blast furnace technology. From 2030 onwards, we want to produce 3.5 million tonnes, about 70% of our steel, with lower emissions, and by 2045 we want to achieve production that is as CO2-neutral as possible”, said Dr Karl-Ulrich Köhler, Chairman of the Management Board of SHS – Stahl-Holding Saar and Chairman of the Management Boards of Dillinger and Saarstahl.

For Iberdrola, this PPA for Baltic Eagle comes shortly after the developer signed a contract for 250 GWh of annual production with Holcim, a Switzerland-based provider of innovative and sustainable building solutions.

Prior to this, Iberdrola had also signed two PPAs for the offshore wind farm with Amazon and Salzgitter Flachstahl.

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The Baltic Eagle project is currently under construction in the German Baltic Sea, northeast of the Rügen island off the Pomeranian coast and is scheduled to be commissioned by the end of 2024.

The offshore wind farm will comprise 50 Vestas 9.5 MW wind turbines, installed on monopile foundations, and will be linked to the German high-voltage grid via the Ostwind 2 grid connection.

The 476 MW project is the second of three large-scale offshore wind farms Iberdrola has in Germany, alongside the 350 MW Wikinger and 300 MW Windanker.

Collectively, the three wind projects form the company’s so-called Baltic Hub, which will have a total capacity of more than 1.1 GW by 2026 and account for an investment of about EUR 3.7 billion in total.