tkH2Steel: Revised Funding Locks In a Gas-First Start for thyssenkrupp's Duisburg DRI Plant

The headline from Duisburg is not that the money changed — it is that the ambition was re-profiled. On 30 October 2026, thyssenkrupp Steel (TKS) received a definitive amended funding notice for tkH2Steel, its 2.5 Mt/yr direct reduction (DRI) plant, after the European Commission confirmed the revisions were compatible with EU state aid rules (trade press reported the decision on 2 November). The operative change: hydrogen use will no longer follow a fixed calendar but a flexible, demand-led ramp, with the plant running initially on natural gas and progressively higher hydrogen blends. The company is preparing a fresh long-term hydrogen tender.

This matters beyond one project. tkH2Steel is the largest single hydrogen-based steelmaking bet in Germany and the anchor of thyssenkrupp's decarbonisation strategy. The amended terms are an admission that the green-hydrogen market did not arrive on schedule — and a pragmatic attempt to protect the asset while keeping the option to decarbonise.

The project, as built

Contrary to any impression that tkH2Steel is still at the feasibility or tender stage, it is a large construction site with contracts long since closed. The key packages are awarded:

At peak the site has been described as employing up to about 2,000 construction workers across some 60 buildings, with a main structure around 140 m high. As of late 2026, TKS reports formwork, reinforcement and major concrete pours completed for the DRI tower and the two melters — civil works substantially advanced, with steel erection and equipment installation the working front.

Why the funding terms changed

The original design assumed hydrogen would be available in sufficient quantity and at workable cost from around 2027–2028, reaching full hydrogen operation in 2029. Two things broke that assumption. First, the February 2024 hydrogen tender — roughly 143,000 t/yr, later profiled as up to 151,000 t/yr under 10-year contracts — was paused in March 2025 after bidders' price indications came in "significantly higher" than expected. Second, cost pressure on the plant itself: Reuters reported in September 2024 that TKS was flagging risks and potential cost increases, with the project then estimated at around €3bn.

The amended notice resolves the standoff by decoupling the plant's operation from a fixed hydrogen timetable. It allows a gradual, flexible ramp-up of hydrogen use depending on availability, economic feasibility and customer demand — in effect, permission to run a hydrogen-ready plant on gas for longer than originally promised to Brussels and Berlin, without losing the funding.

Reading the schedule honestly

The start-up date has slipped repeatedly and should be treated as indicative rather than firm:

• Original plan (2023): start-up end-2026; hydrogen from 2027–2028, full H₂ in 2029.
• 2025 guidance: SMS indicated a step-by-step start-up from end-2027.
• 2026 position: the hydrogen timetable is now explicitly flexible; first hydrogen use and full hydrogen operation are no longer fixed dates.

The practical read for suppliers and customers: first iron is targeted from around late 2027, and the plant will operate as a natural-gas DRI unit initially. That still delivers a substantial CO₂ reduction versus the blast furnace route it partly displaces, but well short of the full hydrogen case.

Commercial and steel-market implications

For the hydrogen sector, the signal is cautionary. Europe's flagship industrial offtaker has just told the market it will not pay prevailing prices for large volumes on a fixed schedule. The relaunched tender will be watched closely for what TKS is willing to commit — volume, tenor and indexation — and will shape bankability for prospective suppliers.

For the steel supply chain, the procurement picture is largely settled on the primary build. The EPC, technology and construction-management contracts are placed and the structural and equipment packages sit with SMS and its consortium. Steel and equipment supply for the main plant should be treated as substantially committed rather than an open opportunity; any remaining scope sits within the SMS-led execution and is not evidenced as separately tendered. Future demand lies in maintenance, spares and any later phases — none of which is currently evidenced as open.

For thyssenkrupp's strategy, the amended terms buy time. The company keeps a hydrogen-capable asset and the option to decarbonise as supply and prices improve, while avoiding a stranded investment or an unaffordable offtake commitment. The risk is that "hydrogen-ready" becomes "hydrogen-deferred" indefinitely if the market does not develop.

What to watch

• The relaunched hydrogen tender: timing, volume profile and contract terms — the clearest test of whether the flexible model can actually attract supply.
• First iron: confirmation of the late-2027 start-up and whether further slippage occurs.
• Cost overrun: whether the ~€3bn estimate holds and how any gap is shared between TKS and the public funders under the amended notice.
• Blend trajectory: the pace at which hydrogen share rises from zero — the number that ultimately determines the project's climate value.

Assessment

tkH2Steel remains a genuinely large, funded, under-construction project with world-class engineering behind it. The revised funding decision is best understood not as a setback to construction but as a recalibration of its green promise to match a slower hydrogen reality. For industry professionals, the takeaway is that the plant will be built and will run — but its headline decarbonisation will arrive later and more gradually than the 2023 announcements implied.