Norwegian hydrogen company Nel announced Thursday it will supply a 20-megawatt alkaline electrolyser to engineering steel manufacturer Ovako, Kallanish reports.

The purchase order received by Nel Hydrogen Electrolyser has a contract value of €11 million ($12.34m). The electrolyser system will be installed at Ovako’s Hofors plant in Sweden and delivered in late 2022. First hydrogen production is slated for 2023.

By replacing propane gas with green hydrogen in heating furnaces, Ovako expects to halve the CO2 footprint of its steel production in Hofors. Steel products from the European manufacturer, a subsidiary of Sanyo Special Steel and part of Nippon Steel, already have a total carbon footprint 80% lower than the global average, according to Nel.

Hofors is set to be the first plant in the world to use hydrogen to heat steel before rolling and hot forming. The plant highlights the “huge potential” for green hydrogen use in steel-heating processes, notes Nel’s ceo Jon Løkke.

Swedish carmaker Volvo Group announced in June a collaboration with Hitachi Energy, H2 Green Steel and Nel Hydrogen to invest in fossil-free hydrogen in Hofors, with a future goal of developing fossil-free steel. The project was also backed by the Swedish Energy Agency.