Large scale, low cost firm power supply contracts are required to decarbonise Iron and Aluminium production
At the heart of Port Kembla’s industrial precinct is Bluescope’s iron and steel plant. To fully decarbonise steel making (3mt per year) approximately 1,500 MW of continuous or firm power is required to run electrolysers for hydrogen to feed a Hydrogen Direct Reduced Iron process. In future, to economically produce green iron at Port Kembla a low-cost firm power supply contract is required.
A distinguishing feature of electrolysers is their ability to flexibly turn up or down quickly. For example, if there was a surge in peak demand or if there was scarce solar and wind generation, electrolysers could turn down diverting power to satisfy grid demand. A firm power supply contract to provide power at a fixed price for 90% of the time is an advantage for continued iron making at Port Kembla. The remaining 10% (2.4hrs/day at max 2,000MW power) could supply the grid when most needed.
Iron making at Port Kembla has a cost advantage because of grid connected large scale energy storage flexibility and an existing skilled workforce. Construction and operating costs of remote sites may be 1.6x higher than established grid connected industrial sites with nearby energy storage.
Tomago aluminium smelter currently consumes about 960 MW or approximately 10% of NSW power supply. The Tomago smelter does not have the ability to easily flex production like electrolysers. To guarantee continued operation of the Tomago aluminium a new low-cost firm power supply contract is necessary beyond 2028.
