Can Spain meet its 11GW hydrogen target by 2030?

Spain is an established green energy leader in Europe, with its significant wind and solar generation capacity providing renewable energy generation over 50% of the nation’s total electricity mix. The next phase of Spain’s decarbonisation strategy looks set to exploit its renewable hydrogen potential. According to research by Rystad Energy, Spain can reach around 5 GW of installed electrolyser capacity by 2030. However, to reach its 11 GW target — the largest in the European Union (EU) — the country will need of additional support from its grant programs. . Germany follows closely in second place, with a target of 10 GW by 2030, but is currently forecast to reach 4.5 GW, according to Rystad Energy analysis.

Spain’s optimal conditions for renewable energy, together with supportive policies, have positioned it as one of the most cost-effective regions for green hydrogen production. Although the global hydrogen market has fallen short of investors’ early and enthusiastic expectations, with only a few projects operational – such as the 20-megawatt (MW) green Puertollano hydrogen plant in Spain itself – the outlook is more promising. Our projections show that Spain could significantly boost green hydrogen production by 2030, with most projects considered low-risk and on track to be commissioned on time, thanks to strong government support. This funding is already generating progress, as seen in BP’s recent final investment decision for the first 25 MW phase of the Castellón refinery’s hydrogen plant, which could expand to 2 GW of electrolysis capacity by 2035.

The European Hydrogen Bank (EHB) highlighted the advantages and interests of the Spanish hydrogen sector by subsidizing three major Spanish initiatives through a pilot tender that attracted a total of 130 bids from European nations, including 46 from Spain. EHB’s support is complemented by the Spanish government’s significant €794 million ($885 million) state aid package under the EU’s IPCEI Hy2Use program aimed at supporting hydrogen-related infrastructure, including large-scale electrolysers and transport networks for production , storage and distribution -hydrogen carbon. In addition, Spain’s hydrogen sector is set to benefit from a €2.3 billion subsidy program recently announced by the government, of which €1.2 billion will be dedicated to the development of renewable hydrogen hubs and €750 million euros to strengthen the nation’s green technology supply chain. With this, Spain joins other European countries such as Germany, France, the Netherlands, in the recent opening of financing programs and billion-dollar auctions.

Spain is positioning itself as a key player in Europe’s hydrogen market, but has yet to define plans to generate domestic demand. Unlike Germany, which has set ambitious targets and ranks second in production capacity, Spain could focus on becoming a net exporter, particularly in Germany, which faces challenges due to less favorable conditions favorable renewable energy. By seizing this opportunity, Spain could not only benefit, but position itself as a game changer in the regional hydrogen landscape.

Minh Khoi Le, Head of Hydrogen Research, Rystad Energy

Learn more with Rystad Energy’s Hydrogen solution.

In the EHB pilot auction, bids from all applicants ranged between €0.37 and €0.48 per kilogram of renewable non-biological fuel hydrogen (RFNBO), with projects receiving grants between €8 million and €245 million, advancing significantly each applicant country. green goals. Spanish bids stood out, with the lowest levelized average cost of production, benefiting from lower renewable energy costs.

One of the awarded Spanish projects, DH2 Energy’s Hysencia, will have a 35 MW electrolyser capacity and will bid €0.48 per kilogram for 17,000 tonnes of hydrogen over 10 years, seeking €8.1 million in funding EUR. Located in Argon, the project recently obtained an environmental permit and will include a solar feedstock capacity of 49 MW. With incentives, the project’s estimated levelized cost of hydrogen is €6.24 per kilogram ($6.86 per kilogram). DH2 Energy will work with ArcelorMittal and Fertiberia, which will use hydrogen in the steel and fertilizer industries respectively.

The second successful Spanish project in the EHB pilot tender was Benbros Energy’s El Alamillo H2. It has a capacity of 60 MW and is bidding at a price of EUR 0.38 per kilogram, requesting a total financing of approximately EUR 24.6 million for 65,000 tons of hydrogen over a period of 10 years. This puts the project’s estimated levelized cost of hydrogen, with incentives, at €5.80 per kilogram, with details of off-take agreements not yet available.

The latest Spanish project to win the EHB auction is Renato PtX’s Catalina Project, with a 500 MW electrolyser capacity at €0.48 per kilo for 480,000 tonnes of hydrogen over 10 years. It plans to develop 1.1 GW of combined solar and wind power and will be connected to a green ammonia plant via a 221 kilometer hydrogen pipeline. Supported by EHB, the estimated levelized cost of hydrogen is €4.61 per kilogram. The project aims to produce 84,000 tonnes of green hydrogen and 247,000 tonnes of renewable ammonia using 504 MW of onshore wind and 571 MW of solar PV, with Fertiberia as the main supplier for fertilizer production.

At the national level, Spain’s Ministry of Ecological Transition has unveiled a €1.2 billion funding initiative for large-scale green hydrogen projects and powerful electrolysis plants, financed entirely through the Facility for Recovery and Resilience (FRR). Scheduled to launch in the last quarter of 2024, the program aims to develop extensive green hydrogen valleys or clusters, boosting the large-scale production and use of electrolytic hydrogen and its derivatives.

To qualify for funding, applicants must secure commitments to purchase at least 60% of their hydrogen production, have a minimum installed capacity of 100MW and ensure that the hydrogen is produced from renewable sources. They must also meet additional criteria, including promoting job creation, gender equality, socio-economic development, small and medium-sized enterprises, circular economy practices and reducing emissions. Projects can cover multiple locations within 100 kilometers of each other and receive up to €400 million each.

Of Rystad Energy

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