Thyssenkrupp’s Hohenlimburg steel processing plant in Germany’s industrial heartland uses as much energy as a small city, as metal bars are heated to well above 1,000C and rolled into coils to be used by carmakers’ suppliers and other buyers.
While it burns natural gas to heat its furnaces, the plant is also a heavy user of electricity — and was the first in Germany to derive it directly through wind power, provided by four 160m-high turbines installed last year on a hill a few kilometres away.
European industry is having to think differently about how it sources its energy, amid sustained pressure to cut carbon emissions and as wind and solar power play a bigger role in supplying electricity.
For some, that means installing wind turbines or rooftop solar panels. For others, it means being smart about when machinery is run, to make the most of spot market electricity prices that swing wildly depending on the strength of the wind and the sun.
Wind is a good solution at the Hohenlimburg plant because of its setting, according to Dennis Grimm, chief executive of Thyssenkrupp’s steel business, but it cannot be used everywhere. He fears that the investment required for new power stations and electricity cables will mean that high electricity costs for businesses such as his will persist, while complicating efforts to switch away from fossil fuels.
“It’s unsolvable at the moment,” Grimm told the Financial Times, arguing that plans to shift to cleaner energy needed to be realistic and to leave companies in a competitive position.
The cost of energy is a huge concern in Europe, where manufacturers must compete with cheaper imported products from China as well as tariffs when selling to the US. Energy-intensive industries in Germany faced a power price of $92 per megawatt/hour in 2024, according to data from the International Energy Agency, compared with $70 in China and $45 in the US.
European steel producers also have to pay for their carbon emissions, although at present they receive most of their allowances free from their respective governments to deter them from moving production abroad.
It was under these and other pressures that Thyssenkrupp announced it would cut 5,000 steel jobs by the end of the decade, amid a wider restructuring of the group in which it will separate and seek outside funding in some business divisions to try to make itself more agile and boost investment.
But companies also see a competitive advantage in producing greener products as customers also come under pressure to decarbonise.
“Without any doubt we have to go in this direction,” said Christoph Evers, head of the Hohenlimburg plant’s hot-rolling mill. “This is really the potential for differentiation. You’ll never win a race simply on a cost basis.”


As well as direct connections to wind farms, Thyssenkrupp and others are increasingly striking deals with renewable power developers for electricity that goes into the shared national grid. The amount of renewable electricity sold to companies under long-term power purchase agreements climbed 35 per cent last year, according to energy research firm BNEF.
“In the old days, consumers were only interested in the cheapest possible package,” said Domenico Franceschino at energy trader Axpo. “But the importance of the green transition has increased.”
That requires careful management of weather-related risks to electricity supply. Some contracts “are delivered as a baseload product with the risk of low sun or wind lying with the developer itself”, said Sonia Thimmiah, senior director for global sustainability at Dutch beer group Heineken, which wants to source entirely renewable electricity by 2030. “With some, we bear a bit more of the risk. It’s not one size fits all.”
The wind turbines connected to Hohenlimburg supplied about 40 per cent of the site’s electricity over the past year. But it could not do the same at all its sites.


The company makes steel in coal-fired blast furnaces in Duisburg, using the byproduct gases to generate its own electricity. It would need “more than 80 wind turbines”, said Grimm, to meet that plant’s electricity demand with wind instead. Given that power plants directly connected to a factory cannot be more than 5km away under German law, industrial deployment of wind turbines on this sort of scale is virtually impossible.
It plans to move away from coal-fired blast furnaces and is investing in technology to retrieve iron from its ore using hydrogen instead. In the longer run, it may move to electric arc furnaces, requiring much more electricity — the equivalent of “hundreds” of turbines, according to Grimm.
While companies plan new equipment for the longer term, they must also grapple with wild swings in spot market electricity prices because of the growth of wind and solar power.
Prices increasingly fall below zero at particularly windy and sunny times as there is limited cable capacity to move power to where it is needed. Traders say some factories are trying to find ways to adjust their output to take advantage of the sub-zero rates and avoid the spikes.
The extent to which companies are doing this is limited but impactful, according to Franceschino. “If you can shift 1 per cent of your production when prices are negative compared to paying €1,000, that’s a huge saving,” he said.


Grimm said businesses like Thyssenkrupp Steel needed “to find the right operational spots where energy costs are lower than at other times. This is something where, as the steel industry, you have to change your thinking.”
Shifting to greener electricity is far from the only challenge ahead. The company in March had to pause a tender for “green” hydrogen, made by passing electricity through water, because of high prices as the market for the gas struggles to take off.
As well as at Duisburg, it is also interested in using hydrogen instead of natural gas inside the furnaces at Hohenlimburg that heat steel bar, which account for the vast majority of the total energy use at the site.
Thyssenkrupp said it would discuss the situation with the German and EU governments with a view to using the gas as soon as “technically and economically feasible”. It added it could use hydrogen in place of natural gas at Duisburg and still cut emissions compared with coal.
Germany’s energy department acknowledged that high electricity costs were denting competitiveness, and said it was working to lower energy prices as well as develop a hydrogen economy.
Despite the challenges, the company said it was determined to stay the course. “All of us are committed to carbon neutrality — there is no other view on that,” says Grimm.