Hybrid Grid-Renewable Strategies for Green Steel Production under Electricity Market Uncertainty
Volatility in grid spot prices is expected to rise with climate change-driven demand pressures and the intermittency of renewable generation. This volatility poses financial risks for green hydrogen-based steel production. The Direct Reduced Iron− Electric Arc Furnace (H 2 -DRI-EAF) is a promising pathway to decarbonize steel, which accounts for ∼8% of global GHG emissions. This study assesses how increased grid spot price volatility influences the optimal sizing and operation of H2-DRIEAF plants under three operational scenarios: grid-connected, fully behind-the-meter (islanded), and mixed-mode (semi-islanded). Our analysis identifies the semi-islanded configuration as the most cost-effective solution, achieving a Levelized Cost of Steel (LCOS) 10−35% lower than sourcing energy solely from the grid. Modeling also shows hydrogen storage or selective electricity purchases at high prices (>$1000/MWh) generally outperform battery storage, except under extreme volatility. Additionally, the study explores cost reduction strategies to strengthen the economic viability and sustainability of green steel production.