Optimizing the transition pathway of a steel plant towards hydrogen-based steelmaking

Direct reduction of iron ore using hydrogen is a promising alternative to traditional coke-based reduction that could greatly reduce CO2 emissions from the steelmaking industry. In this alternative route, hydrogen and iron oxides react in a shaft furnace to produce direct reduced iron that is further processed in electric arc furnaces into liquid steel. The total process is greatly dependent on electricity, both for producing hydrogen and for operating the electric arc furnace. When considering a possible transformation of a traditional steel plant to hydrogen-based direct reduction, there are several open questions regarding appropriate configurations and dimensions of new units, scheduling of investments, integrated operation of old and new units, etc. Furthermore, the entire transformation process could span several decades, during which market conditions may change substantially. To help planning such a transition, this paper presents a steel plant optimization model that minimizes accumulated costs or emissions of investments and operation over a selected time horizon, during which new units can be constructed and old units possibly be decommissioned. The task is formulated as a mixed-integer quadratically constrained programming problem, with simplified regression models of blast furnaces and shaft furnaces based on more detailed models. Model performance is illustrated with an example case in which the possible transition of a steel plant with two blast furnaces that are expected to be decommissioned within the next twenty years is analyzed, demonstrating that the model is a flexible planning tool for comparing and assessing different future scenarios for decarbonizing the steel industry.