ArcelorMittal joins hands with Greenko for renewable energy projects

ArcelorMittal, the world’s biggest steel maker has tied up with Greenko, one of the largest home grown renewable companies to use cleaner energy alternatives instead of fossil fuels like coal or natural gas to fire its critical infrastructure like blast furnace and smelters. This is part of the steelmaker’s efforts to switch to cleaner energy sources to decarbonise production around the world.

Steel production is source of up to a tenth of global carbon-dioxide emissions.

Together the two companies will develop ‘round the clock’ renewable energy project -- a 975 MW solar and wind farm -- in Andhra Pradesh that will be owned and funded by ArcelorMittal but designed, constructed and operated by Greenko, the companies said in a statement on Tuesday. Another similar sized farm is expected to come up after the completion of the first phase, whose commissioning is expected by

mid-2024, said officials aware of the plans.

Arcelor Mittal will be investing $600 million (Rs 4500 crore) for the first phase and is expected to incur similar investment in the second phase as well. This till date will be the largest investment made by a steel company towards greener, cleaner energy in the country.

Greenko will also be providing its pumped hydro storage infrastructure that is it independently building in Andhra Pradesh, along with its cloud based platform to provide firm, reliable 24x7 green power and overcome the intermittent nature of wind and solar power generation.

The alliance will help to source over 20% of the electricity requirement at Arcelor Mittal’s Hazira, Gujarat plant -- that it acquired in 2019 with partner Nippon Steel -- from renewable sources, reducing carbon emissions by approximately 1.5 million tonnes per year. Thus, the project offers the steel maker the dual benefits of lower electricity costs and lower CO2 emissions, and improves the return on investment potential for Arcelor Mittal. ArcelorMittal Nippon Steel India (AM/NS India), will enter into a 25 year off-take agreement with ArcelorMittal for round the clock renewable electricity annually from the project.

ArcelorMittal’s joint venture company in India, ArcelorMittal Nippon Steel India (AM/NS India), will enter into a 25 year off-take agreement with ArcelorMittal to round the clock renewable electricity annually from the project.

“Large amounts of green energy are one of the key foundations for both a net zero economy and a decarbonised steel industry,” said Aditya Mittal, CEO, ArcelorMittal. “We are excited about the potential of replicating this model in other regions. It demonstrates how establishing partnerships and collaborating across the supply chain can help us to progress faster towards our decarbonisation targets.”

ArcelorMittal’s rapid decarbonisation is part of a $10 billion global green transformation strategy that kicked off in 2020 and is spearheaded by Mittal (46) himself, after taking over last year, from his father Laxmi Mittal, the sprawling empire that stretches across Europe, Asia, Americas and Africa. The company also explored bidding for a large solar power portfolio of Sprng Energy, a renewable platform of Actis Llp.

“This is a pioneering partnership … and we hope it will serve as a blueprint for the adoption of renewable power for large-scale steel manufacturing in India. These efforts will also represent a notable contribution to India’s own commitment to build 500 GW of renewable energy capacity by 2030,” said Anil Kumar Chalamalasetty, CEO and Managing Director at Greenko.

Steel companies, much like fossil fuel behemoths are under pressure from policy makers, climate activists and Wall Street to shun legacy practices of carbon emission. ArcelorMittal’s India operations are currently centred around Essar Steel India, located in Hazira, Gujarat, which it acquired for Rs 42,000 crore – the largest asset sale through the country’s bankruptcy courts – with its 40% joint venture partner Nippon Steel Corporation (NSC) of Japan.

Most Indian steelmakers that rely on significant captive energy sources, are trying to address the issue of global warming and bringing down emissions in their manufacturing units. For example, Tata Steel and Tata Power in October 2021 had signed a Power Purchase Agreement (PPA) to develop a grid-connected solar project in Jharkhand and Odisha. The two also signed a PPA for a duration of 25 years to set up 41MW solar project, which will be a combination of rooftop, floating and ground mounted solar panels.

Similarly, JSW Steel has earmarked Rs 557 crore to be spent on Best Available Technologies (BAT) for environmental sustainability during FY 2020-21. The company is further planning to invest around Rs 10,000 crore in the coming decade to achieve the stated carbon reduction target by FY 30. Naveen Jindal-led Jindal Steel and Power is also working on a Hydrogen project through Syngas which is used to reduce Iron to produce DRI. It brings down the CO2 emission levels.

Even state run Steel Authority of India had a new Joint Venture Company GEDCOL SAIL Power Corporation Limited (GSPCL) to develop a small Hydro Electric Plant of 10 MW (3 x 3.33 MW) capacity at Mandira Dam, Rourkela.