Drive into and out of “Westside” along the West Seattle Bridge and you are bound to see Gotham-esque amounts of steam billowing from the Nucor steel plant on occasion. Behind the scenes, Nucor workers are melting masses of scrap metal down at extreme temperatures and turning them into rebar – a basic construction building block.

The work requires a lot of energy, making Nucor Steel Seattle City Light’s number one customer, and produces a lot of wasted heat in that evaporates into the atmosphere … until now.

City Light announced on Feb. 5 that Seattle’s City Council approved an ordinance “to allow Seattle City Light to enter into an innovative energy conservation contract with … Nucor Steel …” to harness that heat and turn it into energy.

According to City Light, the project will produce enough energy to heat an estimated 540 Seattle homes a year, turning wasted heat into 5,000 megawatt-hours of energy. Scott Thomsen, spokesman for City Light, further explained that Nucor will actually return most of that energy right back into their operation, and in doing so they reduce the electrical demands City Light needs to meet.

“Seattle City Light and Nucor have stepped up and aggressively pursued an opportunity to take an innovative approach to energy efficiency,” Mike O’Brien, chair of the City Council Energy & Environment Committee, said in a statement. “The utility and its largest customer, Nucor are showing leadership under the requirements of I-937.”

I-937, the Washington Energy Independence Act passed by voters in 2006, requires “utilities with more than 25,000 customers to acquire 15 percent of their energy needs through new renewable energy sources by the year 2020,” according to a press release. This plan works into that long term goal.

“Today’s Council vote adopts the Department of Commerce’s advisory opinion and gives City Light the authority to enter into a long-term agreement with Nucor,” City Light officials wrote. “It gives Nucor the certainty it needs to negotiate engineering and equipment contracts with vendors.”

Fine print wise, the two have entered into a 12-year contract where City Lihgt will pay two cents per kilowatt-hour produced by Nucor, which helps Nucor justify the costs of implementing the new system. In return, Nucor is “required to repay any portion of the financial incentives if the project is permanently shut down” at any time during the life of the contract.

According to the plan presented to the City Council, Nucor will spend $3.5 million to bring a 1.1 megawatt capacity generator online, which can produce a maximum of 5,450 megawatt-hours per year.

Nucor is negotiating with vendors now and hopes to have the project up and running in 2014.