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 (H2-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-DRI-EAF 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.
Roulier et al. (2026) studied this question.