voestalpine and VERBUND launch strategic cooperation projects

Both energy producers and industrial companies are currently facing major challenges in energy policy in Europe. While the climate and energy targets of the EU contain a reduction of CO2 emissions by 40 percent up to 2030, thus confronting energy-intensive industries with almost insurmountable problems, the electricity industry is also in the midst of radical, far-reaching changes associated with the energy transition or energy paradigm shift. Within this context, long-term viable and stable partnerships between energy and industrial corporations are becoming increasingly important. The prospective stepped-up cooperation between the technology and capital goods group voestalpine and VERBUND, the largest Austrian electricity producer and one of the largest electricity producers using hydroelectric power in Europe, goes clearly beyond the classic sector of mere electricity supply for the first time and is actively focusing on the joint utilization of future opportunities in both industries.

Building on existing business relationships, as a first step, the planned cooperation comprises the supply of electricity by VERBUND to individual voestalpine locations in Austria conducted on an expanded basis that will address the complex price and service structures of the future better than in the past. A supply agreement has been concluded for an initial period of six years. Furthermore, projects for renewable generation of electricity by voestalpine itself at its locations in Austria are currently being undertaken. Concretely, the feasibility and cost-effectiveness are being analyzed and operating models for photovoltaics systems are being developed. Additionally, the partners want to collaborate even more comprehensively than before on demand-side management solutions, i.e., how to offset short-term fluctuations in the power grid by using voestalpine’s power generation facilities. The fourth core area is a joint, long-term research initiative on the subject of hydrogen, where the focus will be on the potential and the possibilities for the use of hydrogen in the individual process steps of steel production.

The designated joint objective of the strategic project work is ultimately to critically examine and evaluate the long-term competitiveness of Austria as a location for industry with regard to energy-specific requirements.

In the steel industry, voestalpine has long been an environmental and efficiency benchmark. The company has spent more than EUR 2.2 billion in the last ten years alone just for the ongoing costs of operation for environmental systems in Austria. The steel production locations Linz and Donawitz are practically independent with regard to the generation of electricity due to an integrated energy cycle, where the process gases that occur in steel production are converted to electricity in voestalpine’s own power plants, which is then used in downstream facilities (particularly the rolling mills).

Hydrogen-based steel production is currently still a future scenario; from today’s perspective, it could be reality in around 20 years. In order to fully convert its production to renewable energy, the Group would need around 33 TWh (terawatt hours) per year from the external power grid because a comprehensive change in the technology would bring with it energy requirements that can no longer be covered by the company’s own electricity production. This corresponds to the production of more than 30 major hydroelectric power plants or around 50 percent of Austria’s entire power requirement. This means that a switch to a new technology will not be technically or economically feasible for voestalpine in the foreseeable future. “A transformation requires a long-term, permanent coordination between energy producers and energy consumers so that switching to a new technology makes sense only if the required energy is available at terms that are globally competitive,” Eder states. The voestalpine CEO also emphasizes that the framework conditions to maintain competitiveness in every phase of such a far-reaching transformation process depend far more on political decision-making processes rather than economic ones.

VERBUND is consistently continuing on its path to becoming a 100 percent CO2-free energy producer. Currently, around 95 percent of the electricity generated by VERBUND comes from renewable energies, primarily hydropower. In addition to power generation, transmission, trading, and distribution, the company is increasingly focusing on the expansion of its energy-related services for industrial and commercial customers as well as for households. “We are delighted that this future-directed cooperation between two major Austrian corporations is coming to fruition; this proves that the issues important for the producing industry and the efficient use of clean energy complement each other. Our joint objective is to reduce CO2 emissions and to enhance Austria’s standing as a location for business and industry,” confirms VERBUND CEO Wolfgang Anzengruber. “The subject of hydrogen specifically has a great deal of potential for both industrial use and as a storage technology to compensate volatile electricity generation by new, renewable energies.”

The project cooperation between VERBUND and voestalpine is planned for an initial period of six years. The partnership agreement provides for the possibility to add additional joint projects to the current areas of focus.

VERBUND is Austria’s leading electricity company and one of the largest producers of hydroelectricity in Europe. The Group generates more than 90 percent of its electricity from hydropower. VERBUND trades electricity in twelve countries; it generated EUR 3 billion in annual revenue in 2015 and has around 3,000 employees. With its subsidiaries and partners, VERBUND’s activities range from the generation of electricity to transport and international trading and sales. VERBUND has been quoted on the Vienna Stock Exchange since 1988; 51 percent of its share capital is held by the Republic of Austria. Additional information: www.verbund.com