In a groundbreaking move for sustainable industrial development, Swedish green iron and steelmaker Stegra, formerly known as H2 Green Steel, has signed a long-term Power Purchase Agreement (PPA) with Uniper, a German low-carbon power producer. This agreement, announced in late November 2024, marks a critical milestone in Stegra’s quest to revolutionize the steel industry with sustainable, low-carbon solutions. The deal will ensure a steady supply of 100% renewable electricity, critical for Stegra’s flagship green steel plant in Boden, Sweden, from 2027 to 2032. The partnership also strengthens the global shift towards a more sustainable industrial ecosystem, providing significant support in reducing industrial emissions across Europe.
Founded in 2020, Stegra is setting new standards for the steel industry by integrating green hydrogen technology into its steel production process. Located in Boden, Sweden, the company is constructing a state-of-the-art green steel plant that will utilize hydrogen produced using 100% renewable electricity to remove the oxygen from iron ore, avoiding the carbon emissions traditionally associated with steel production.
Unlike conventional methods that rely on carbon-intensive blast furnaces, Stegra’s process will produce green iron and green steel, significantly reducing emissions. The plant will integrate a giga-scale green hydrogen plant capable of powering a 700 MW electrolysis system. This system will generate hydrogen needed for the reduction of iron ore into green sponge iron, which will then be used to produce steel. Construction of the facility began in 2022, with operations scheduled to commence in 2026. By 2030, Stegra aims to produce up to five million tons of green steel annually as part of its broader mission to decarbonize the steel sector.
At the heart of Stegra’s green steel innovation is the use of green hydrogen—hydrogen produced from water electrolysis powered by renewable energy sources such as wind and solar. This hydrogen acts as a reducing agent to replace coke (a coal product) in the traditional iron-making process. As a result, green hydrogen eliminates carbon dioxide emissions, a major contributor to industrial pollution.
The green hydrogen production will be powered by electricity supplied by Uniper, ensuring that Stegra’s operations remain fully renewable and sustainable. The PPA guarantees a 6 TWh (terawatt-hours) supply of electricity over six years, covering the period from 2027 to 2032, a critical timeframe to scale up Stegra’s operations and achieve its ambitious sustainability targets.
Uniper, a leading European energy company, has made significant strides in transforming its energy portfolio to support the transition to a low-carbon economy. Headquartered in Düsseldorf, Germany, the company has set clear targets to achieve carbon neutrality by 2040 and aims for over 80% of its installed power-generating capacity to be zero-carbon by the early 2030s.
Through this partnership, Uniper will play an integral role in supplying the renewable electricity required for Stegra’s operations. Uniper’s commitment to sustainability aligns perfectly with Stegra’s goal of producing green hydrogen and green steel at scale. By supporting Stegra’s green steel plant, Uniper is not only contributing to the decarbonization of one of the most energy-intensive industries in the world but also reinforcing its own vision of a sustainable energy future.
The partnership between Stegra and Uniper is much more than a typical power supply agreement. It is a strategic collaboration designed to drive the green transition in industrial sectors. According to Arne Österlind, Head of Energy Portfolio at Stegra, the agreement with Uniper forms the foundation for a long-term relationship that ensures access to clean electricity essential for the company’s green steel production in Boden. This partnership marks a key step in Stegra’s journey to accelerate industrial emissions reductions and provide a model for other industries to follow.
Uniper’s involvement in this project is also a testament to its commitment to supporting the industrial sector’s transition to renewable energy. Johan Svenningsson, Country Chairman at Uniper Sweden, expressed pride in being a part of this transformative initiative, highlighting Uniper’s role as a reliable partner in the ongoing energy system transition.
The collaboration between Stegra and Uniper comes at a time when the need for low-carbon solutions in Europe is more urgent than ever. The steel industry is one of the largest sources of carbon emissions globally, and its transformation is vital to achieving the continent’s climate goals. According to the European Commission, the steel sector accounts for roughly 7-9% of global CO2 emissions, making it a prime candidate for decarbonization initiatives.
Stegra’s plant in Boden will serve as a pioneering example of how green hydrogen can revolutionize energy-intensive industries like steel manufacturing. With the support of Uniper’s renewable electricity, the plant will not only reduce its carbon footprint but also provide a scalable model for the future of industrial decarbonization. By 2030, Stegra’s plant is expected to significantly reduce carbon emissions in Europe, helping the continent stay on track to meet its climate targets under the European Green Deal.
The combination of green hydrogen and renewable electricity represents a groundbreaking innovation in the industrial sector. Stegra’s flagship plant in Boden will be one of the largest facilities globally to use hydrogen for iron reduction, offering a sustainable alternative to traditional blast furnace technologies. As Stegra and Uniper work together to develop and scale these technologies, their collaboration could serve as a blueprint for the transformation of other sectors, from cement production to heavy transport, that also rely on carbon-intensive processes.
Moreover, Stegra’s commitment to scaling its production to five million tons of green steel annually by 2030 is an ambitious yet achievable goal. This milestone will position the company as a major player in the global green steel market, which is expected to grow significantly as industries and governments seek to meet their climate obligations.
The partnership between Stegra and Uniper represents a major leap forward in the effort to decarbonize the steel industry. By providing renewable electricity to power the green hydrogen production process, Uniper is helping Stegra create a sustainable model for steel manufacturing that could reshape the entire industry. As both companies work toward achieving their respective sustainability goals, this collaboration exemplifies the power of innovation and strategic partnerships in driving the global transition to a green economy.
As the green steel revolution gathers momentum, the example set by Stegra and Uniper will likely inspire more industrial players to adopt similar sustainable practices. This partnership is a clear indication that with the right mix of technology, investment, and commitment, a low-carbon industrial future is not just possible, it's within reach.
