ArcelorMittal, Greenko to set up $600 mn renewable energy project

Project will be owned and funded by ArcelorMittal, will enable AM/NS India to prune power costs and carbon emissions

The world’s second largest steel producer, ArcelorMittal, has entered into a strategic partnership with one of India’s leading renewable energy companies, the Greenko Group, for a project that will power the decarbonisation journey of ArcelorMittal Nippon Steel India (AM/NS India).

The contours of the arrangement are like this: The two companies will work together to construct a “round-the-clock” 975 Mw of nominal solar and wind capacity project. The $600 million project, which will be supported by Greenko’s hydro pumped storage project, will be owned and funded by ArcelorMittal. Greenko will design, construct and operate the renewable energy facilities in Andhra Pradesh, South India. AM/NS India  – ArcelorMittal’s joint venture in India – will sign a 25-year offtake agreement with ArcelorMittal to purchase 250 Mw of renewable power annually from the project.

The commissioning is expected by mid-2024 and the transmission will be through Power Grid Corporation of India.

According to the statement, this will result in over 20 per cent of the electricity requirement at AM/NS India’s Hazira plant coming from renewable sources, reducing carbon emissions by approximately 1.5 million tonnes per year.

The project offers AM/NS India the dual benefits of lower electricity costs and lower CO2 emissions, and it also provides an attractive return on investment for ArcelorMittal, the statement further said.

ArcelorMittal has a 60 per cent equity interest in AM/NS India. In 2019, it had acquired Essar Steel jointly with Nippon Steel under the insolvency law and the joint venture was named AM/NS India.

Commenting on the partnership with Greenko, Aditya Mittal, CEO, ArcelorMittal, said, “This is an attractive opportunity for ArcelorMittal. We will be partnering with a highly experienced energy transition company in a project that will enable our joint venture company AM/NS India to reduce both its electricity costs and carbon emissions, as well as providing consistent, guaranteed returns for ArcelorMittal.”

“Large amounts of green energy are one of the key foundations for both a net zero economy and a decarbonised steel industry. We are excited about the potential of replicating this model in other regions. It demonstrates how establishing partnerships and collaborating across the supply chain can help us to progress faster towards our decarbonisation targets,” Mittal said.

The steel industry contributes between 7 and 9 per cent to global emissions, and players across the world are setting goals for reducing their carbon footprint. ArcelorMittal has set a target of 25 per cent global reduction in CO2 emissions intensity by 2030 at an anticipated cost of US$10 billion.

Dilip Oommen, CEO, AM/NS India, said, “The strategic renewable energy project reinforces our firm commitment towards sustainability that lays strong emphasis on decarbonisation of steel. The partnership is the right step towards our quest to reduce carbon footprint, enabling India to accelerate the transition towards a green economy.” 

Commenting on the partnership with ArcelorMittal for the project, Anil Kumar Chalamalasetty, CEO and managing director at Greenko said, “This is a pioneering partnership with the world’s leading steelmaker and we hope it will serve as a blueprint for the adoption of renewable power for large-scale steel manufacturing in India. These efforts will also represent a notable contribution to India’s own commitment to build 500 GW of renewable energy capacity by 2030.”