Salzgitter Group, a German steel and technology group, has tapped the generation arm of Octopus Energy, global clean energy tech business, to supply solar energy to its steel production.
The two companies agreed that Octopus will supply Salzgitter with 126 gigawatt hours of clean electricity per year from the Schiebsdorf solar farm in Brandenburg. The deal supports Salzgitter’s aim to pioneer a low-carbon steelmaking program. The steelmaking sector in Germany currently accounts for 28% of the country’s industrial emissions.
Globally, steel and iron production are a carbon-intensive industry largely due to the reliance on coal, used as a reducing agent to extract iron from iron ore and to provide the carbon content needed in steel, according to the International Energy Agency.
The industry has been looking to decarbonize through innovations like carbon capture and storage, which sequesters carbon dioxide from the atmosphere but does not address underlying emissions. Using renewable energy in steelmaking could also help.
The deal with Octopus will enable Salzgitter to have certainty over its electricity costs and produce steel with a reduced carbon footprint. The German steelmaker plans to use an electrolyzer to harness the energy from Octopus’ solar farm to produce green hydrogen, which would replace fossil fuels in the steelmaking process.
“This partnership with Salzgitter is a significant leap towards decarbonizing heavy industry and propelling Germany’s clean energy transition,” said Alex Brierley, co-head of Octopus Energy Generation’s fund management business. “Germany’s shift to net zero has many huge opportunities to get involved, and we’re geared up to announce more deals very soon.”
Octopus acquired the Schiebsdorf solar farm in January on behalf of the Sky Fund. It is the largest solar farm in the company’s energy portfolio in Germany and globally. Octopus plans to invest more than $1 billion toward German clean energy infrastructure by 2027.
The agreement between Octopus and Salzgitter will be underway later this year when the solar farm is operational and will last 10 years.
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