ClimateEnergyEnvironment

Renewable hydrogen, key to decarbonizing the industry

The public conversation around renewable hydrogen has intensified in recent months. The reason? It is no longer just a technical solution suitable for decarbonizing complex industrial processes or facilitating energy storage. It is also a way to reduce Europe’s exposure to Russian gas. While the European Hydrogen Strategy envisaged to reach a production of 10 million tons in 2030, in the recent REPowerEU Plan, the European Commission proposes that the EU should consume twice as much green hydrogen by the end of the decade, 20 million tons.

We already knew that we needed to implement specific policies to stimulate industrial demand and the gradual incorporation of renewable hydrogen in those activities using hydrogen (such as petrochemicals or fertilizers) and in those that require it to decarbonize (such as the steel industry or cement manufacturing).

In the current context, an additional reason needs to be added: the industrial deployment of this key sector for the energy transition will enable to reduce Europe’s energy vulnerability.

 

Renewable hydrogen, a country project

In Spain, the development of renewable hydrogen is considered a country project, due to the great opportunities and benefits it can bring. We have an internationally well-established clean energy industry that also aims to be a reference in the field of renewable hydrogen. Spain hosts the largest hydrogen production facility for industrial use in Europe and the largest operating plant in the world, in Puertollano.

Spain has abundant renewable resources and occupies leading positions in terms of installed power: the country ranks fifth in the world in installed wind energy and renewable energy already covered nearly 47% of our electricity demand last year.

`The government has developed a stable regulatory framework that enables the deployment of sustainable technologies and the promotion of innovation, which is key in the case of renewable hydrogen, where we must stimulate both supply and demand.

Investors are also aware of this competitive advantage and place us at the top of international rankings for investment attractiveness. Companies looking for a clean, cheap and secure supply also value Spain’s position, as we rank first in terms of signing long-term power supply contracts (PPAs).

On this basis, which clearly points to Spain’s capacity to obtain competitive hydrogen from renewable sources within a few years, we are implementing a strategy to develop hydrogen that, in line with the EU, looks both to 2030 and 2050.

 

Replacing fossil hydrogen

Our Renewable Hydrogen Roadmap sets out our targets for 2030, including reaching 4 GW of installed electrolyzer capacity, 10% of the European Union’s goal, and replacing a minimum of 25% of the current industrial consumption of fossil hydrogen, which is around 500,000 tons per year, mainly for ammonia production and refining processes. In line with the greater European ambition, we are currently revising upwards the objectives of our energy planning for 2030.

In the short term, we want to encourage the production of renewable hydrogen at points close to demand, creating small ecosystems around the technology, which will allow us to identify best practices and extrapolate them, gaining economies of scale, in the medium term. Companies are already forming alliances that integrate the links in the production and consumption value chain.

Among the different regulatory and incentive tools, we have developed a Strategic Project for Renewable Energies, Hydrogen and Storage (PERTE ERHA) to position Spain as a technological reference in the production and use of renewable hydrogen.

A budget of EUR 6,900 million from the European Next Generation fund has been allocated to the project, which will mobilize investments worth EUR 16 billion. 22% of the budget, EUR 1.555 million, is specifically earmarked for promoting renewable hydrogen.

The Spanish government has already launched several calls for hydrogen grants within the framework of PERTE ERHA, for pilot projects and the promotion of the industrial value chain, endowed with EUR 400 million. The response has been extraordinarily positive and, in the coming months, we will launch a call for hydrogen clusters and valleys and another one for large-scale pioneering projects. We estimate that the total investment in renewable hydrogen from this extensive promotion program alone will be around EUR 4.3 billion over the next few years.

The government has consulted the market and received more than 500 proposals with an investment volume of more than EUR 10 billion. These proposals are focused on the development of an innovative value chain, end-use applications and the creation of hydrogen ecosystems. Thanks to the preconditions explained above and this political impetus, 20% of all hydrogen projects worldwide are nowadays located in Spain, with the industry as one of the major players.