Expert column: Mikhail Kulikov Head of Marketing (Electrical Engineering), NLMK Group

21 января 2019

Mikhail Kulikov
Head of Marketing (Electrical Engineering), NLMK Group 

Wind energy investment

The issue of reducing CO2 emissions is currently dominating the global agenda. Major players – China, Europe, USA – are declaring their intentions of achieving carbon neutrality by 2030–2060. They are focusing on developing green energy, mainly by expanding wind generator capacities. Preference is given to offshore wind power stations: since there is more wind on water, energy generation is much more intensive there. 

NLMK Group, the only producer of non-grain-oriented steel for electrical equipment in Russia and one of the largest in the world, is a significant contributor to the current agenda. Our company cooperates with such important players as the Euro Group holding, its subsidiary, Euro Group Laminations Russia, and the Ruselprom machine building enterprise. Jointly with our partners, we provide components for building wind farms in Russia. 

Electric motors for achieving zero carbon

Increasing the efficiency of electrical equipment is another major factor on the way to carbon neutrality.  Experts estimate that over 60% of electric energy consumed globally is generated by electric motors. Their average efficiency stands at 70–80%. We see that leading countries are becoming more active in transitioning to premium IE3 motors (premium-level energy efficiency) and IE4 (super-premium). For instance, in 2020–2021, Europe introduced several legislative acts that tightened requirements for the energy efficiency of electric motors. Since June 2021, certain electric motors with 2–8 poles and a capacity from 0.75 kW to 1000 kW have to comply with the new IE3 standards. Starting from 2022, IE4 norms apply to motors with 2–6 poles and an average capacity from 75 kW to 200 kW. 

Increased demand for high-efficiency motors automatically implies increased demand for non-grain-oriented steel with low magnetic losses (lower than 3.5 W/kg). This tendency is observed not only on the external market: Russian partners who are focused on exporting high-tech products are also becoming more and more interested. We see a noticeable change in steel consumption structure. Quite recently customer order books had a 30:70 ratio of low-magnetic-loss grades and standard grades. Currently, the proportions are even. 

Electrical transport – a new reality

Another contribution to the planet’s decarbonization is the active replacement of ICE fleets with electric cars and hybrids. Several estimations show that there are already over 10 million electric vehicles in the world, and in the next 10 years the fleet of electric transport will grow by 10% annually.

We are seeing various stimulation levers, from tax benefits to generous infrastructure investments. Here are some of the most interesting examples.

• The Netherlands are freeing electric car drivers from registration fees and the tax on using overloaded roads, along with investing €30 million in creating a network of charging stations.
• Norway, the global leader in the number of electric vehicles per capita, offers electric vehicle buyers direct tax benefits and generous incentives in the form of subsidies when paying for parking, electric vehicle charging, and various road fees.
• Germany reserves approximately €1 billion for supporting the production of vehicle batteries.
• China increased tax benefits for electric vehicle drivers by 15%.
• Denmark is banning all ICE cars. The government expects that the country’s electric vehicle fleet will reach 1 million by 2030. 
• India has adopted an “electric vehicles only” concept for 2030; Tesla Motors has offered tax benefits and financial support for local production placement.
• USA President Biden has set a goal to reach a 50% share of electric and hybrid cars in overall sales by 2030.

We are witnessing an interest in electric cars on the Russian market as well. Russia has adopted an electric vehicle development programme: by 2024 the plan is to produce at least 25,000 electric vehicles and open over 9,000 charging stations (http://government.ru/docs/43060/ ). At the same time, major cities, especially Moscow, are actively expanding their electric transport fleet and the corresponding infrastructure. The city has approximately 1,000 electric buses and about 2,000 electric cars. The capital’s authorities are testing innovative charging devices for electric vehicles in the city. 

Russian automotive manufacturers are showing their willingness to develop the production of electric vehicles. In particular, we see KAMAZ and AURUS, a producer of executive class cars, showing interest in this issue.

Plane and scooter electrification 

Aviation is not standing in place either. The largest commercial airplane with an electric engine - Cessna Caravan 208B - can reach speeds of over 100 miles per hour and heights of approximately 2,500 feet. Another ongoing project is the development of the narrow-bodied Wright 1 airplane with a 750-horsepower electric engine. The plane is meant for domestic service. It can perform flights of 800 miles and carry 186 passengers.

Pandemic-related isolation measures and the active development of delivery services have spurred a boom in personal electric transport, and Russia is no exception. Electric scooter sales in Russia have almost tripled in a year: over 300,000 so-called personal mobility vehicles were supplied for retail. https://iz.ru/1229682/valerii-kodachigov/plata-za-razezd-prodazhi-elektrosamokatov-v-rf-vyrosli-pochti-vtroe

NLMK increases capacity

Our captive capacities and our non-grain-oriented steel production process fine-tuned over 35 years have enabled us to provide steel of the required quality for all our partners.

Meanwhile, we are actively investing in our own development. The laboratory centre for microstructural analysis at the Lipetsk site allows us to constantly perfect steel quality and expand our offering.

In order to widen our product mix, we are also introducing additional capacities at our main production site in Lipetsk. In 2020, NLMK Group launched a project to install a new production complex, which includes a vacuum degasser, a reverse mill, and a continuous annealing line. The new line will be launched in late 2022, enabling the production of High-Frequency NGO steel with a thickness of up to 0.2 mm, which is especially in demand by electric vehicle producers. In addition, the new vacuum degasser will help us produce non-grain oriented steel with an ultra-low carbon content, allowing us to expand the range of High and High-Frequency grades and satisfy the most exigent customer demands.