Salzgitter Signs Clean Energy Deal with Zelestra to Power Green Steel Production

German steel manufacturer Salzgitter announced an agreement by its subsidiary Salzgitter Flachstahl, with Spanish renewable energy company Zelestra to supply green electricity from new solar and battery storage projects in Germany to support the production of low-carbon steel.

The new deal, spanning 2 projects for 147 MW of solar capacity, combined with 237 MWh of battery storage, marks Germany’s largest hybrid solar-plus-storage power supply agreement (PPA) to date, according to the companies.

According to Salzgitter, the new agreement will support its Salzgitter Low CO₂ Steelmaking, or SALCOS, initiative. SALCOS targets virtually carbon-free steel production through the use of hydrogen direct reduction, in which iron ore is heated with the aid of hydrogen, instead of coal which is typically used in blast furnaces, with the process powered by renewable energy.

Marco Hauer, Head of Group Energy Procurement at Salzgitter, said:

“The agreement supports our ambitious decarbonization of steel production and helps to secure the competitiveness of the Salzgitter site. We are pleased to have Zelestra at our side, a proficient and experienced business partner who is successfully putting innovative and CO₂-free energy solutions into practice.”

Under the agreement, Zelestra will build, own and operate two new hybrid plants in Brandenburg and Thuringia, each combining solar generation with directly connected battery storage systems. Salzgitter will purchase a total of 147 MW, or 158 GWh annually, of solar power from the two projects and will control the operation of the 237 MWh of battery energy storage systems (BESS).

According to the companies, the batteries will be charged exclusively with surplus solar power from the plants, enabling Salzgitter to increase its procurement of green electricity while using energy storage to more closely match electricity supply with its consumption.

Zelestra said that the agreement supports its expansion in Germany, where it is developing more than 2 GW of solar, hybrid, wind and energy storage projects.

Mathias Künicke, CEO of Zelestra in Germany, said:

“As the largest hybrid deal in Germany to date, it shows real ambition from both parties, and we expect this segment of the market to grow considerably in the months ahead. It builds on the hybrid expertise we’ve developed across other European markets, and we’re proud to work alongside Salzgitter as they take an important step towards commercial green steel production.”