Electric arc furnaces generate enormous amounts of heat as very high voltages cause the electric decomposition of air into plasma. This heat can be used to melt down and recycle scrap steel, with 85% lower CO2 emissions than primary steel production.
Our base case model yields a 15% IRR at $475/ton steel prices. However, the timing is flexible. Hence the EAFs can used to smooth out volatile renewables in the power grid, running primarily in periods of high wind and solar generation. If a lower power price is achieved by integrating directly with renewables, then IRRs are uplifted by 2-6pp.
Please download the model to stress-test economic sensitivities.