Ørsted Secures Exclusive Access to Lower-Emission Steel from Dillinger

Business & Finance

March 13, 2024, by Adnan Memija

Ørsted will be offered the first production of lower-emission steel from German-based Dillinger, subject to availability and commercial terms and conditions. The steel plates are intended to be used for offshore wind monopile foundations in future projects.

Under a large-scale supply agreement entered into in 2022, Ørsted will procure significant volumes of regular heavy plate steel from 2024, giving the company access at scale to and visibility of the most crucial raw material in offshore wind while supporting Dillinger to accelerate investments in new lower-emission steel production, according to Ørsted.

The Danish renewable energy giant expects to be able to procure lower-emission steel produced at Dillinger’s facility in Dillingen, Germany, from 2027-2028.

Taking the current technology outlook into account, the reduction of the process-related carbon emissions from production is expected to be around 55-60 per cent compared to conventional heavy plate steel production, Ørsted said.

“Long-term offtake agreements like this one are key to decarbonising hard-to-abate materials such as steel because it takes clear demand signals to drive investments in the technologies needed to decarbonise production,” said Virginie Van de Cotte, Chief Procurement Officer at Ørsted.

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The Memorandum of Understanding (MoU) signed between the two companies follows the EU’s recent passing of the Net Zero Industry Act, which makes non-price criteria in renewable energy auctions mandatory within the EU.

Thus, the agreement with Dillinger not only helps accelerate the decarbonisation of the steel industry but also provides Ørsted with the optionality to deliver on expected decarbonisation criteria in coming auctions when they materialise, said the company.

“The agreement with Ørsted proves that steel made in Germany is relevant for the success of the climate and energy transition, and that it has a future. With the support of the German federal government, we’re now investing in the transformation of our production facilities to be able to produce carbon-reduced steel from 2027 onwards,” said Stefan Rauber, CEO of Dillinger.

Ørsted currently has 6.7 GW of offshore wind under construction in 2024 across several projects worldwide, more than ever before in the company’s history, according to a recent newsletter from the global offshore wind developer.