The European Steel Association's (EUROFER) latest report on the EU's Electrification Action Plan warns that Europe's steel sector cannot remain globally competitive without access to affordable and reliable clean electricity. The Association stressed that electricity prices for European producers have become structurally higher, usually two or three times higher than in competing regions.
Between 2018 and 2023, the EU lost 34 million tons of steel production, the decline in EUROFER is illustrated by a steep trend line that closely coincides with periods of high electricity prices. Unlike the United States and China, where industrial electricity costs remain relatively low, the price structure in Europe hinders industrial recovery and hinders long-term investment planning.
Decarbonization requires huge new amounts of clean energy
Despite almost constant industrial demand for electricity until 2025, decarbonization trajectories require rapid expansion of clean energy. Today, the sector consumes about 75 TWh/year. By 2030, EUROFER expects the sector to require more than 165 TWh of non-fossil fuel electricity and 2.12 million tons of green hydrogen per year.
These resources are needed to support more than 60 planned low-carbon steel projects, which collectively aim to reduce emissions by 80 million tons by 2030. EUROFER warned that these projects will remain viable only if electricity is competitively priced. secured.
PPAs cannot provide price stability for heavy industry
EUROFER stated that renewable energy purchase agreements (PPAs), designed to ensure long-term price predictability, continue to monitor wholesale markets indexed by fossil resources. The direct price curves for wind and solar energy show that renewable energy valuations rise and fall in line with the volatility of short-term markets.
The main structural barrier is the high costs of establishing and strengthening non-permanent production of renewable energy sources. Steel production requires a constant base load, while solar and wind energy supplies fluctuate dramatically. Buyers are forced to cover the deficit at marginal prices set by fossil fuel producers.,
