Electricity is the new oil. That is the belief Lutz Bandusch, CEO of ArcelorMittal’s steel plant in Hamburg, Germany, shares with many of his countrymen. And so it is with gusto that he and his plant’s energy manager, Matthias Weng, are approaching “NEW 4.0,” an “energy system of the future” pilot project meant to begin showing manufacturers around the world how to profitably use energy produced by windmills and solar panels.
NEW stands for the Norddeutsche Energie-Wende (Northern German Energy Transition), and 4.0 refers to the fourth industrial revolution, which involves the smart networking of systems.
NEW 4.0 aims to prove that coordination between industry, power generators, power distributors and government agencies in a region with 4.5 million residents can lead to using only safe, affordable, and eco-friendly power sources as soon as 2035. Along the way, the partners figure they can cut carbon emissions more than 50%.
The states of Hamburg and Schleswig-Holstein have been combined into one energy region to serve as a showcase for Germany, first, and eventually the world.
ArcelorMittal needs no introduction as an international company: The Luxembourg-based company is the result of a Western European steel maker and an Indian-owned multinational steel maker about a decade ago. “We have projects everywhere around the world” that will benefit from the work NEW 4.0 participants began undertaking last year, Bandusch said. “We have to work on renewables: the fossils will not last forever, so it’s very important to look for solutions beyond oil now.”
To move away from using energy from coal and nuclear power plants and toward a “CO2-free economy based mainly on electricity,” ArcelorMittal’s Hamburg plant is focused on two projects aimed at adapting an electric power station to the volatile, decentralized energy supply, he said.
Weng and the rest of ArcelorMittal’s engineering team—which in the last decade reduced its CO2 footprint by 12%—took on this challenge: Using homegrown technology, make production in the ArcelorMittal factory flexible so it can accommodate wind-speed fluctuations and cloudy days.
“In the old energy world, the steel plant was built and there was a coal-fired power plant or nuclear plant that followed the demand of the steel plant,” Bandusch said. “Now, with changing over more and more to renewables, we are more dependent on weather conditions: wind and sun. This is a game-changer. These renewables cannot follow the demand; they are available when we have wind and sun.”
ArcelorMittal is currently installing three windmills on site—far fewer than the 35 3-MW-class windmills it would need to cover just the power needs of the melting shop, provided that sufficient wind is always available in times of melting, he noted.
Adjusting Melting Speed
In one project, called Timeshift, the company over the last 18 months adjusted power for an electric arc furnace plus or minus 10 mw, which meant melting scrap steel faster or slower than normal.
ArcelorMittal showed it is able to handle the logistics, but it found it is only 75% available to take part in such a program. “We cannot take energy during the time we are producing our steel,” Bandusch said.
Federal law in Germany requires participants to be 98% available (accommodating yearly maintenance), and so efforts are underway to change the law. “When this law was made, nobody thought an industrial company, like a steelmaker, would be flexible on taking such big amounts of energy when it is available,” he added.
At the moment, Bandusch said, Germany has not set up transmission of renewable energy from the north to the south, where demand is much greater, contributing to the scenarios under which excess renewable energy in the north goes unused. As a consequence, the grid operator typically turns the windmills off as capacity is reached. But industrial power customers in Germany pay according to available wind—whether or not windmills are turning. “So we are paying a lot of money for electricity not generated and not consumed,” Bandusch said.
In the future, Bandusch can see giving the grid operator control over fast- or slow-melting of ArcelorMittal’s scrap metal. That would let the grid operator increase demand in case of high availability of electricity—instead of stopping the generation.
“We are ready to do this. We have tried it on the technical side. In the case of the steel plant here, the bottleneck is the caster,” he said. “The Timeshift idea involves producing steel in advance—let’s say during the night—and slowing down during the daytime when all of us are starting our coffee machines and TVs or whatever so the private consumption is higher.”
ArcelorMittal would, of course, be paid to take part in demand-side management. And it would save money by using off-peak demand power.
Finding Uses for Excess Energy
In the other project, called Power2Steel, the company is proposing using excess energy from renewables for inductive preheating of billets. Inductive preheating, in ArcelorMittal’s case, involves putting electricity on a spool and running iron bars through it. Because of the induction, the interference of the magnetic field, the steel heats up.
Today, the company uses natural gas to heat up the steel, Bandusch said. “If we would install this spool, we can switch between using natural gas or electricity. So instead of transferring natural gas into electricity, we switch and directly use electricity coming from renewables and leave natural gas in storage.”
That direct use of electricity, as opposed to transferring the power into gas, alleviates losses associated with converting power into natural gas for the process.
Bringing Supply, Demand Together
NEW 4.0 will continue into 2021, said Jan Rispens, managing director of the Renewable Energy Hamburg cluster, a regional association for renewable energy, as well as energy efficiency and infrastructure. The cluster is doing the business-to-business marketing for NEW 4.0.
Two years ago, the Federal Ministry of Economic Affairs in Germany publicized a tender in which consortiums from regions around Germany could apply for subsidies to start pilot and demonstration projects around intelligent energy supply. NEW 4.0 was selected as one of five regional winners.
“Our specific focus is on the fact that we have loads of wind power in Schleswig-Holstein, and we have big loads [of power users], especially in and near the city of Hamburg, which has the second largest port in Europe,” Rispens said. “There are about 100-200 KM of distance between them. The idea is to bring them together.”
Sixty partners are working on 100 projects, including the Timeshift and Power2Steel projects at ArcelorMittal. Most projects are still in the planning phase. Results are expected within four years.
In addition to ArcelorMittal, Siemens, the copper mill Aurubis and aluminum plant Trimet are part of NEW 4.0, he said.
Siemens is working on a thermal energy storage project on Trimet’s manufacturing site, Rispens said. Collaborating with the utility Hamburg Energie, Siemens plans to store electricity in a high-temperature facility that employs hot stones. “They want to feed in electricity when there is excess renewable power, and when there is low electricity from renewables they want to generate electricity by turbine,” he added.
Aurubis is working on several projects to “flexibilize” its load, he said. “They plan to switch between natural gas and electricity for heating in certain processes.”
Trimet wants to “flexibilize” the electricity demand of its aluminum electrolysis, Rispens said.
“We are seeing, more and more, that [companies in] the manufacturing industry are no longer passive energy consumers,” he said. “They want to be part of a [renewable energy integration] system. They want to flexibilize their load.”
NEW 4.0 will first demonstrate that a city like Hamburg—a big power consumer on a small surface—will never be able to generate enough renewable energy on its own but can source it from other parts of North Germany.
“In Hamburg, we have a lot of load, but a very low percentage of renewables,” he said. “So we want to show in our region how can we make most of the renewable energy and consume as much of it as possible on a regional scale—before we start sending it to southern Germany.”
Once that issue is resolved, the focus will shift to nationwide application.
The goal is to create a “blueprint for the German energy transition 10 to 15 years from now,” Rispens said.
“In the electricity sector in Germany today, we have a renewable energy share of 35%, but it’s divided regionally very unevenly. In the northern federal state of Schleswig-Holstein, on an annual average, we already have more than 100%,” he said. When Hamburg is calculated along with Schleswig-Holstein, the renewable energy share is about 50%.
Expecting to Assist Other Countries
Finally, the German experiment has designs on global change: “For sure, the hope is that if it works in Germany why should it not work in the rest of the world?” Bandusch said.
“We are a frontrunner in this, maybe,” he added. “Maybe this is some decades ahead, but it takes time for some ideas on paper to become reality, so it’s very important to start with this here and now.”
Added Rispens: “The German government has opened this subsidy program with the idea in mind that the experiences we are making here sooner or later will be made in all large industrialized countries first, maybe, and in emerging markets later.
“This system integration of all energy markets—electricity, power, heat, mobility—is something all countries will face in the next decades,” he said. “If we can show this is a functioning model in Germany, then of course that will provide us with export opportunities later on.”
A good comparison, Rispens said, is the thinking behind the development of the wind energy sector.
The German government 25 years ago recognized that developing wind power was not only about transforming its own energy system; it was also about “developing a new industrial sector with a large export potential,” he said. “If you look at the wind energy sector [in Germany] today, with its 130,000 employees, 60% to 70% of the production by wind turbine manufacturers is exported.”