Decarbonizing the Steel Processing Industry: A MILP-Based Assessment of Electrification and Hydrogen for Hot Rolling

Abstract The steel processing industry confronts substantial challenges in decarbonization, particularly within the hot rolling process, due to uncertainties surrounding viable clean alternatives. The industry’s heavy reliance on fossil fuels necessitates a shift towards more sustainable options. The hot rolling process currently relies on natural gas fired industrial furnaces for reheating steel. Electrification and hydrogen utilization have emerged as promising clean alternatives, yet neither has achieved full maturity nor widespread application, leaving the industry at a crossroads. This paper conducts an economic and design assessment of two decarbonization scenarios for steel rolling mills. Emphasis is placed on evaluating the impact of a highly volatile grid on overall costs and analyzing the systems’ responses to grid volatilities. One scenario involves electrification using induction heating, while the other involves a switch to hydrogen, including local production. Employing mixed-integer linear programming (MILP), our objective is to minimize total annual costs (TAC), including investment and operational costs, while considering the feasibility of decarbonization pathways. Our approach includes the introduction of storage units — battery and hydrogen storage — to enhance system flexibility. Electricity price forecasts for Austria in 2050, representing a fully renewable grid, are used and capture grid volatilities and seasonal fluctuations. Results reveal that generally, electrification proves more efficient although it poses challenges within a volatile grid due to high peak demands. Conversely, the hydrogen scenario, with an electrolysis unit and storage options, effectively balances cost fluctuations. Storage units significantly impact the hydrogen scenario, reducing costs, while in the electrification scenario battery storage offers limited cost benefits. Furthermore, CO2 avoidance costs were calculated for both systems, revealing significant expenses associated with reducing CO2 emissions.