Spain has the potential to become one of the most significant EU hubs for green hydrogen due to its high renewables capacity, but experts have warned it must first develop an effective regulatory framework and guarantee of origin system.

The Spanish government approved a roadmap in October 2020 that would see it invest €1.5bn in green hydrogen projects as well as enact other regulatory measures, with the goal of installing 4GW of electrolysers by 2030.

“Developers do not currently see a clear regulatory framework” Diez, Watson Farley & Williams

The plan involves constructing 150 retail hydrogen stations and sets a goal for green hydrogen to contribute a minimum of 25pc of all hydrogen consumed by 2030.

Spanish law categorises hydrogen production as an industrial activity, which sets severe restrictions on the use of land for hydrogen infrastructure, according to David Diez, partner with law firm Watson Farley & Williams. “Developers that are analysing potential developments are not seeing a very clear regulatory framework,” he says.

The Spanish government hopes to address this and accelerate development by introducing legislation to reclassify green hydrogen production and fuelling sites. It will also alter regulations to enable electricity lines to be linked directly to green hydrogen production more easily.

It is also looking to develop a guarantee of origin (GOO) system, in collaboration with other EU nations and the European Commission, to incentivise the development of a price signal for green hydrogen that would encourage uptake of the fuel.

In road transport, it will develop incentive schemes for vehicle purchase and refuelling infrastructure development. It will also look at the development of a national port infrastructure for refuelling in the maritime sector.

The government will also develop a national system to measure hydrogen consumption, with detailed adoption targets, and promote the creation of so-called hydrogen valleys or clusters.

Renewable power

The government plans for its 112GW renewable capacity to rise to 133GW in 2025 and 161GW in 2030, according to its Integrated Plan for Energy and Climate (PNIEC). These levels are being targeted with a mixture of legacy subsidy mechanisms, including feed-in tariffs and contracts for difference (CfD).

High electricity costs are one of the principal barriers to development, and these measure means electricity prices are almost certain to fall in the future, making green hydrogen an increasingly attractive proposition. Hydrogen technology should also help solve the intermittency issue of renewables for power providers, says Diez.

“There are many developers that are considering the possibility of electrolysers in order to maximise their incomes, by producing hydrogen when prices are low,” he says.

All the major players in the Spanish energy system including Repsol, Iberdrola, Naturgy and Endesa are developing hydrogen production projects. Meanwhile, Enagas, the country’s main distributor of gas, is taking part in multiple joint ventures to develop separate installations.

4GW – Electrolyser capacity to be installed by 2030

Hydrogen has not yet been injected into the gas distribution network, but this will be tested at the cluster level before the government decides the extent to which it can take place more widely, and what modifications might be needed for the network, according to Ignacio Grangel, a partner of Spanish law firm CMS.

“To enable the gas infrastructure to carry and distribute hydrogen, a remuneration framework which would encourage the required modifications needs to be introduced, he says. “A guarantee of origin system would also be necessary.”

Currently, Spain’s gas network can incorporate between 5pc and 10pc hydrogen.

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Author: Tom Young