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The European steel industry recommendations on Industrial Demand Side Response
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Executive summary
➢ As decentralised energy systems will be dominated by variable and intermittent weather-dependent electricity generation, the provision of flexibility services under all relevant time-frames will need to be scaled massively to maintain an efficient functioning and security of supply.
➢ The European steel industry is already a key provider of flexibility in the EU electricity system.
➢ The need to realise in record-time new fossil-free generation capacity and expand electricity grids, key enablers of the decarbonisation of industries, shall nonetheless remain the priority.
➢ The sector could contribute further provided that the structural challenges around the energy transition, namely the speedy roll-out of new generation capacity, the expansion of grids, and the restoration of cost-affordable electricity prices, are addressed first and as a priority.
➢ The assessments of flexibility needs, technology potentials, and the related target-setting process shall preserve and respect the economic, organisational, and technical limits of industrial production processes such as steel.
➢ European and national initiatives on demand-side response should create the optimal conditions for industrial consumers to provide flexibility while retaining international competitiveness and limiting overall electricity system costs:
➢ The steel sector overall welcomes the increased focus and planned actions to unlock the full potential of the wider range of DSR technologies in the pursuit of increased system resilience and more efficient use of electricity grids.
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The outlook for the European steel market in 2024 continues to lose momentum amidst persisting challenging conditions. Downside factors such as worsening geopolitical tensions, coupled with growing economic uncertainty, energy prices, inflation, interest rates have further impacted demand prospects. According to EUROFER’s latest Economic and Steel Market Outlook, these challenges have exacerbated the negative effects on apparent steel consumption, resulting in a more severe downturn in 2023 than previously projected (-9%, instead of -6.3%) and weaker growth in 2024 (+3.2%, instead of +5.6%). Output in steel-using sectors, despite showing more resilience than expected in the past year (+1.1%), is now set to decline (-1%). Imports are once again on the rise (+11% in the last quarter of 2023), capturing a staggering 27% market share throughout 2023.
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