Our new analysis presents a case study on the electrification of steel forging furnaces, using a large open-die facility in Germany as the reference case. Compared to other decarbonization options, electrification of steel heating furnaces is a “safe bet”. Thermal energy storage integrates well with certain electrification technologies, but not all. However, the business case will depend on electricity price variability and the grid connection.
The findings are relevant to the wider European steel and metals processing sector, and more broadly to any industry requiring high-temperature process heat.
Steel forging is an energy- and emissions-intensive process. It requires heating large steel workpieces to approximately 1200°C in natural gas-fired furnaces, so they become malleable for deformation. Decarbonization of steel forging requires replacing the gas-fired burners with electric heating technologies, which in certain cases can be integrated with thermal energy storage (TES) to enable flexible electricity consumption and reduce operating costs. This report presents a case study on the electrification of steel forging furnaces, using a large open-die facility in Germany as the reference case. The findings are relevant to the wider European steel and metals processing sector, and more broadly to any industry requiring high-temperature process heat.
Hydrogen, biomethane, and carbon capture and storage are likely to remain costly and constrained by realistic supply. These pathways are also less energy-efficient than direct electrification, as they introduce additional conversion steps. With large-scale renewable deployment, flexible electricity consumption has the potential to be cost-effective. Prioritizing industrial electrification also reduces risk as it maintains a high degree of optionality across many electric heating and storage technologies.
Current natural gas and electricity price ratios in Germany mean that electrification is more costly than continued gas firing. In the near term, biomethane may offer a transitional role, reducing process emissions cost-effectively without requiring major capital investment. However, this strategy is unlikely to be scalable and risks dependence on subsidies which, if reduced, would leave biomethane more expensive than the electrified alternative.
In conventional furnaces, 80-95% of heat transfer to the steel workpiece is dominated by radiation from hot refractory walls, which are initially heated with a combustion burner. Electrification options that similarly heat the refractory lining are therefore most practical and more amenable to retrofit, enabling reuse of the existing furnace. However, the available space within these furnaces is already tight, and geometric constraints must be considered.
TES pairs well with indirect resistive heating systems, which sit outside the furnace and heat an intermediate medium such as air. This decouples electricity consumption from heat delivery, thereby reducing operating costs by enabling the plant to consume electricity preferentially during low-price hours. Other electrification options, such as in-furnace resistive elements which have no intermediate heat-transfer medium, are better suited to battery storage, albeit at a likely higher capital cost than thermal storage.
Optimization of storage dispatch using 2024 hourly German wholesale electricity prices indicates a clear trade-off between grid connection capacity (MW) and thermal storage energy capacity (MWh) when minimizing operating costs. Under current conditions in Germany, achieving an average electricity input cost below the price of natural gas requires “over-powering” the charging capability. A larger grid connection allows more electricity to be stored during low-price hours, but it increases grid connection costs. However, a similar level of operating cost can be achieved with a smaller connection if it is paired with an even larger thermal store. In general, the forge’s existing grid connection will need to be increased by a factor of 5-20, representing a multi-million euro capital expenditure at current grid connection costs of approximately 300,000 EUR/MW.
Align de-risking instruments with retrofit needs, reform network charges to reward flexibility, fast-track grid connections and permitting, and make additional grid connections a state-driven and state-financed topic. Thermal energy storage should be treated as a system asset that supports renewablintegration and can likely reduce operating costs.