Spain has increased its 2030 target for green hydrogen production capacity as it looks to tap its vast renewable power potential and position itself as a key supplier to northwest Europe.

In its final national energy and climate plan, approved at the end of September, the government raised the 2030 target to 12GW, up from 11GW in a previous draft of the document and three times the 2021 target.

The higher target is a positive sign for the development of hydrogen production in Spain, which has emerged as one of the continent’s most competitive locations, thanks to its solar and wind power generation. The country also benefits from ample land availability, a reliable power grid, a high concentration of offtakers, and the necessary infrastructure to distribute products across Europe.

“The key to further advancing green hydrogen as a significant avenue for decarbonisation is increasing demand” Iberdrola

"These factors distinguish Spain from other countries, allowing it to undertake large-scale projects with corresponding economies of scale,” said Spanish energy company Cepsa.

Cepsa, a key player in the emerging Spanish clean hydrogen sector, is developing 2GW of capacity as part of its Andalusian Green Hydrogen Valley and is planning to bid in the second round of the EU’s European Hydrogen Bank (EHB) auctions, scheduled for later this year.

“We are moving forward with development of the first phase of our hydrogen project in Huelva with 400MW of capacity,” Cepsa said

The company recently selected Germany’s Thyssenkrupp Nucera’s alkaline water electrolysis technology for the first 300MW phase of the project and fellow German company Siemens Energy’s proton-exchange membrane electrolysis technology to make up the remaining 25%.

“The decision to use both technologies is part of a multi-supplier approach to create a European value chain for green hydrogen, an essential vector to decarbonise industry and heavy ground, air and maritime transport across the continent this decade,” Cepsa said.

Demand constraints

However, Spanish developers face challenges securing offtakers, reflecting a global issue with demand for relatively expensive green hydrogen.

“The key to further advance green hydrogen as a significant avenue for decarbonisation is increasing demand,” said Spanish energy firm Iberdrola. “Notwithstanding national specificities, demand is a challenge across Europe.”

Earlier this year, Iberdrola cut its target for green hydrogen capacity by a third amid delays in getting funding for some of its projects. The company recently took FID on its 25MW Castellon project, jointly developed with BP and aimed at decarbonising BP’s refinery.

“The continued commitment by the government will be seen as positive by developers, and Spain does have many positives when it comes to hydrogen developments,” Emma Woodward, lead analyst for Europe at consultancy Aurora Energy Research, told Hydrogen Economist.

However, it is important to recognise that targets and realised projects are two different metrics, she added.

“Most countries have set quite ambitious targets, which will be extremely challenging to meet, including most of the countries that have seen project cancellations,” Woodward said.  “It takes much more than targets to see successful projects being implemented, so we should not take it as a given that this will lead to a substantial uptick in project developments.”

She noted that the only project in the first EHB auction round that did not sign a firm contract in October was a Spanish project: local firm Benbros Energy’s 60MW El Alamillo H2.

“This looks to be driven by a lack of announced firm offtakers, proving again securing a creditworthy offtake is one of the most critical steps for a hydrogen developer to lock in,” she added.

Spain is progressing with the development of hydrogen transportation infrastructure. Gas grid operator Enagas is advancing plans to develop the Spanish hydrogen network, set to be completed by 2030. It is also participating in H2Med, a project to interconnect the hydrogen networks of the Iberian Peninsula to northwest Europe.

Enagas is investing €3.7b ($4.0b) in its domestic hydrogen infrastructure, as well as €1b in H2Med and €1.2b to develop two hydrogen storage facilities.

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Author: Beatrice Bedeschi