Energy provider EWE and Salzgitter Flachstahl GmbH (Steel Producer), a subsidiary of Salzgitter AG, have finalized a long-term contract for the supply of green hydrogen, marking what both companies describe as a significant milestone in Germany's hydrogen economy and the decarbonization of the steel industry.

The agreement was signed at the EWE representative office in Berlin in the presence of Parliamentary State Secretary Gitta Connemann and Lower Saxony's Minister President Olaf Lies.

Terms and Scale of the Agreement

Under the contract, EWE will supply approximately 10,000 tonnes of green hydrogen per year to Salzgitter Flachstahl starting from 2030, with delivery to be made via the hydrogen core network.

The agreement carries an initial term of seven years. The hydrogen will be produced at EWE's 320-megawatt production plant currently under construction in Emden, in northwest Germany, making this the first major purchase agreement tied to that facility. For Salzgitter AG, the deal represents the company's first major contract with an external hydrogen supplier.

The 10,000 tonnes per year covered by the agreement will account for approximately 6.5 percent of the total hydrogen requirements of Salzgitter AG's SALCOS program, which stands for Salzgitter Low CO2 Steelmaking. EWE has indicated that additional delivery volumes from the Emden plant will remain available for further industrial partnerships beyond this initial contract.

The SALCOS Program and Its Hydrogen Needs

The green hydrogen supplied under the agreement will feed directly into Salzgitter AG's SALCOS program, the company's flagship initiative to progressively shift steel production away from conventional blast furnace methods toward a virtually climate-neutral route.

The program uses a direct reduction plant in which the substitution of natural gas for coal and coke is already capable of delivering a 60 percent reduction in CO2 emissions compared to the traditional blast furnace process.

The long-term ambition of the SALCOS program, however, is to replace natural gas with green hydrogen entirely, producing water as a byproduct rather than CO2. At full capacity, the direct reduction plant within the SALCOS program can consume up to 150,000 tonnes of hydrogen per year.

Salzgitter AG plans to self-produce around 9,000 tonnes of that total through a 100-megawatt electrolysis plant to be built on its own steelworks site, with the remaining requirement to be sourced from external suppliers including EWE.

EWE's Role in the Hydrogen Value Chain

EWE describes itself as a company that bundles key parts of the hydrogen value chain, spanning production, transportation, storage, and delivery. The Emden production plant at the center of this agreement is being developed as part of the IPCEI "Clean Hydrogen Coastline" large-scale project, through which electrolysis, storage, and pipeline infrastructure are being constructed across northwest Germany.

The agreement between EWE and Salzgitter Flachstahl is structured to market a significant portion of the first expansion stage of the Emden facility, giving EWE a committed offtake customer as it moves to bring the plant into operation and scales up production capacity ahead of the 2030 delivery start date.

Delivery under the contract is subject to RFNBO certification, with European guidelines on additionality as well as the temporal and geographical correlation of electricity procurement serving as determining factors.

Both companies have acknowledged that these existing criteria can significantly increase the production costs of green hydrogen under current calculations.

Calls for Regulatory Reform

Despite the commercial commitment represented by the agreement, both EWE and Salzgitter AG used the announcement to issue explicit calls for policy action, arguing that the hydrogen market ramp-up continues to face structural obstacles that require government intervention.

Salzgitter AG Chairman Gunnar Groebler stated that the contract resolves a "chicken-and-egg dilemma" but stressed that the agreement comes with an urgent appeal to policymakers.

He described comprehensive measures as still necessary to close the cost gap between green hydrogen and conventional alternatives and to minimize business risks, warning that without such action the contract could remain an exception rather than the norm.

EWE CEO Stefan Dohler echoed those concerns, identifying competitive electricity prices, practicable rules for green hydrogen classification, and long-term investment security as prerequisites for transforming individual projects into a functioning market. He acknowledged what he described as initial positive signals on the regulatory front but called for sustained momentum.

Among the specific regulatory measures both companies are advocating for are the timely and reliable extension of electricity price compensation for electrolysers, a prompt revision of the green electricity criteria for renewable hydrogen, the extension of transitional periods for additionality requirements, and practicable adjustments to EU regulations governing RFNBO certification.

Both companies are actively campaigning for changes to EU rules in these areas, with the aim of making renewable hydrogen internationally cost-competitive.

Industrial and Political Significance

The signing ceremony brought together senior political figures alongside company executives, reflecting the broader industrial and regional significance attributed to the deal.

Lower Saxony's Minister President Olaf Lies was present alongside Parliamentary State Secretary Gitta Connemann, underscoring the importance placed on the agreement as a signal for northwest Germany as an industrial location.

Both companies positioned the contract as evidence that supply and demand for green hydrogen can align commercially before the market for the fuel is fully established, with Groebler noting that no German hydrogen economy will develop without initial supply contracts of this kind.

The agreement is framed as a contribution not only to climate goals but also to the long-term resilience and energy independence of Europe as an industrial and economic region.

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