A New Engine for Steel Decarbonization: Can Direct Connection to Green Electricity Become a Key Step?
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2026-01-04
How can steel enterprises explore direct connections to green electricity? How can companies seize the opportunities presented by local consumption of new energy sources—meeting green and low-carbon requirements while also leveraging cost and competitive advantages?
The nearby consumption model, by clearly defining the rights, responsibilities, and benefits associated with new energy projects, stimulates the initiative and proactiveness of users and other diverse stakeholders, thereby meeting a wider range of complex and diversified demands for green electricity. Moreover, nearby consumption projects hold great potential in helping enterprises reduce energy costs, increase their energy self-sufficiency rate, and enhance their green competitiveness.
Key Issues in Exploring the On-site Consumption Model for Steel Enterprises
In the initial stages of understanding and exploring nearby consumption models, steel enterprises need to consider at least three key questions: Is it necessary to adopt a nearby consumption model, and if so, which one should they choose? How should the economic feasibility be evaluated? And how can project risks be effectively managed? Given the recent introduction of specific policies for direct green electricity transactions—and given the high level of industry attention and extensive discussion surrounding this topic—this article will focus primarily on direct green electricity transactions as a case study to explore the three key questions mentioned above.
Do we need to adopt a nearby consumption model, and if so, which one should we choose? Clarifying the core needs of users is the first step in discussing nearby consumption. For steel enterprises, it’s crucial to determine whether they are currently planning for new load growth or optimizing the structure of existing loads. At the same time, they should also reflect on what key objectives they hope to achieve by exploring and promoting the nearby consumption model. Even more importantly, enterprises must define their own core requirements in terms of green electricity consumption. The answers to these questions will determine whether an enterprise is well-suited to adopting a nearby consumption model—and which specific nearby consumption model it should select.
How do we calculate the economic feasibility? When making investment and project decisions, it’s impossible to sidestep the economic equation. In assessing whether a nearby consumption project is “worth it,” steel companies can compare the costs of different consumption approaches. Taking direct green-power connections as an example, a simplified comparison would involve contrasting the cost of purchasing electricity from the market with the cost of developing a direct green-power connection project. Such a comparison helps companies determine which model best meets their specific needs.
How can project risks be effectively managed? Against the backdrop of increasingly clear external policies, investors remain concerned about the risk of asset idleness: If electricity demand from users changes during the investment payback period, how should new-energy power plants—serving as the power source—be handled? This concern is particularly pronounced in green-power direct-purchase projects that serve a single customer. A predictable and actionable adjustment and exit mechanism, as well as the company’s ability to adopt strategic planning and layout, will become critical factors influencing investment decisions.
Exploring Near-Source Consumption Models for the Steel Industry: A Prospective Outlook
As a key energy-consuming industry, the steel sector now faces an urgent “must-answer question”: how to promote the large-scale adoption of green energy electricity within the industry. The nearby consumption model has expanded the possibilities for the steel industry to increase its use of green energy—particularly for steel enterprises that have strong demand for green energy, high electricity consumption ratios, more flexible and adjustable load profiles, and favorable conditions for developing nearby new energy sources. By embracing nearby consumption, these enterprises can harness their own initiative, enabling them to optimize their energy consumption structure and reduce energy costs while ensuring production safety.
Looking ahead, with the support of nearby consumption strategies and policies, steel companies can also explore on-site hydrogen production using new energy sources. + More “combinations” and “approaches,” such as green hydrogen metallurgy, will organically integrate the strategic transformation of the steel industry with green electricity consumption strategies, thereby achieving a systemic green transformation—from energy consumption structures to production processes.
Overall, steel enterprises should comprehensively take into account key objectives such as cost reduction and efficiency improvement, compliance with emission reduction requirements, and enhancement of market competitiveness. They should clearly define the core goals for different stages and develop a corporate strategy for green electricity consumption. With regard to new energy models such as direct connection to green power, enterprises can, based on their specific production characteristics, supply chain needs, regional resource endowments, and future development strategies, proactively embrace change, seize opportunities, and strategically engage in relevant projects—thereby providing replicable and scalable practical examples for the green transformation of China’s heavy industry.
(Source: China Iron and Steel News Network)
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