# Steel plant energy recovery: Economics and contracts Moderate paybacks on an asset welded to coal Source page: https://www.materialinsights.org/energy/e_steel_recovery/rc-econ/ What this tab covers Economics and commercial structures: levelised cost of the recovered energy against the fuel it avoids, host-site risk, and service models such as heat-as-a-service. Paybacks are moderate because the energy is high grade and on site. The risk lies with the host: the asset is welded to a coal-based blast furnace that may not survive the transition. #### Levelised cost of heat or avoided cost Favourable Paybacks are short to moderate. CTCN gives 3 to 4 years for CDQ, with average revenue of EUR 8 to 9 million a year, assuming power is worth EUR 0.16 per kWh, a high price (CTCN figures date from about 2006 to 2011). A 2023 journal study of one Turkish TRT reported 42.4 GWh a year and USD 2.76 million a year of savings, and gave a payback of about 0.15 years on a 2018 plant cost of USD 400,000. Treat that cost and payback as unreliable: USD 400,000 is implausibly low for a turbine averaging about 5.3 MW (calculated, 42.4 GWh over 8,000 h), and probably leaves out most of the installation. Sinter cooler power costs JPY 5,000 million for about 130 GWh a year (calculated), with a 5.5-year payback. Tata Steel reported INR 62 crore for CDQ on two Jamshedpur batteries and INR 65 crore at Kalinganagar. Process gases already meet more than 60% of a typical plant's energy needs.^[1](https://worldsteel.org/about-steel/energy-use-in-the-steel-industry/)^[4](https://www.ctc-n.org/products/sinter-plant-heat-recovery-power-generation-sinter-cooler-waste-heat)^[5](https://www.Tatasteel.Com/investors/integrated-report-2018-19/pdf/Annx_ParticularEnergyConservation.pdf)^[11](https://www.ctc-n.org/node/25918)^[13](https://pen.ius.edu.ba/index.php/pen/article/view/210) CDQ payback 3-4 years^[11](https://www.ctc-n.org/node/25918) TRT case study 42.4 GWh/y; reported payback about 0.15 years (implausible, see text)^[13](https://pen.ius.edu.ba/index.php/pen/article/view/210) Sinter recovery payback 5.5 years^[4](https://www.ctc-n.org/products/sinter-plant-heat-recovery-power-generation-sinter-cooler-waste-heat) CDQ capex, Tata Steel INR 62 crore (Jamshedpur), INR 65 crore (Kalinganagar)^[5](https://www.Tatasteel.Com/investors/integrated-report-2018-19/pdf/Annx_ParticularEnergyConservation.pdf) #### Host factory credit risk Mixed The host is usually a large, rated steelmaker, so default risk is modest. Stranding risk is the bigger concern. CDQ, TRT and blast furnace gas only exist while the plant makes coke and runs a blast furnace. A switch to hydrogen direct reduction or scrap-based electric arc furnaces removes them. Projects should be sized to pay back well before a likely furnace reline or closure date. #### Heat-as-a-service and ESCO models Mixed Most steel recovery is owned by the steelmaker, not by a third party, because the kit is deep inside the process. The main outside channel has been technology transfer. Japanese engineering companies supplied 10 CDQs and 5 TRTs to India, starting from model projects backed by Japan's NEDO. In China, NEDO model projects at Jinan and Jiangyin were credited with a potential 2,359 kt CO2 a year. This pass found no sourced take-or-pay or heat-as-a-service contract.^[9](https://www.jef.or.jp/images/pdf/cjk2015_6_FUJIMOTO%20Kenichiro_20150902_CJK_final_r.pdf)^[11](https://www.ctc-n.org/node/25918) Japanese CDQs in India 10^[9](https://www.jef.or.jp/images/pdf/cjk2015_6_FUJIMOTO%20Kenichiro_20150902_CJK_final_r.pdf) Japanese TRTs in India 5^[9](https://www.jef.or.jp/images/pdf/cjk2015_6_FUJIMOTO%20Kenichiro_20150902_CJK_final_r.pdf) NEDO CDQ projects in China, CO2 potential 2,359 kt/y^[11](https://www.ctc-n.org/node/25918) #### Sources 1. [Energy use in the steel industry](https://worldsteel.org/about-steel/energy-use-in-the-steel-industry/) World Steel Association (worldsteel), 2025 2. [Sinter plant heat recovery (power generation from sinter cooler waste heat)](https://www.ctc-n.org/products/sinter-plant-heat-recovery-power-generation-sinter-cooler-waste-heat) UNFCCC Climate Technology Centre and Network (CTCN) 3. [Integrated Report 2018-19, Annexure: particulars of energy conservation](https://www.Tatasteel.Com/investors/integrated-report-2018-19/pdf/Annx_ParticularEnergyConservation.pdf) Tata Steel, 2019 4. [Japan steel industry's contribution to energy saving (K. Fujimoto, JISF, 2nd CJK Cooperation Dialogue)](https://www.jef.or.jp/images/pdf/cjk2015_6_FUJIMOTO%20Kenichiro_20150902_CJK_final_r.pdf) Japan Economic Foundation / Japan Iron and Steel Federation, 2015 5. [Coke dry quenching for iron and steel sector](https://www.ctc-n.org/node/25918) UNFCCC Climate Technology Centre and Network (CTCN) 6. [Performance, exergy, and environmental analysis of blast furnace top pressure turbine in an iron-steel factory (Albayrak, Ergun and Yildiz), Periodicals of Engineering and Natural Sciences 11(4)](https://pen.ius.edu.ba/index.php/pen/article/view/210) International University of Sarajevo (peer-reviewed journal), 2023 ## Other sections - [Summary](https://www.materialinsights.org/energy/e_steel_recovery/index.md) - [Overview](https://www.materialinsights.org/energy/e_steel_recovery/overview/index.md) - [Correlation](https://www.materialinsights.org/energy/e_steel_recovery/correlation/index.md) - [Science and thermodynamics](https://www.materialinsights.org/energy/e_steel_recovery/rc-sci/index.md) - [Engineering and integration](https://www.materialinsights.org/energy/e_steel_recovery/rc-eng/index.md) - [Impact and additionality](https://www.materialinsights.org/energy/e_steel_recovery/rc-impact/index.md) - [What to track](https://www.materialinsights.org/energy/e_steel_recovery/tracking/index.md) - [Relationships](https://www.materialinsights.org/energy/e_steel_recovery/links/index.md)