LONDON (ICIS)--Spanish utility Iberdrola and chemical manufacturer Fertiberia have formed a new partnership that, with a €1.8 billion investment, aims to install 800MW of green hydrogen production capacity in Spain by 2027.
The announcement from Iberdrola on 28 October is a positive step for Spain in achieving its recent renewable hydrogen target of 4GW by 2030.
IBERDROLA LEADS THE WAY
This builds on a current project announced by the partners which is expected to come online in 2021. The project aims to be Europe’s largest green hydrogen complex for industrial use and is based in Puertollano. The green hydrogen produced will be used in the Fertiberia ammonia plant.
The complex will comprise of a 100MW solar photovoltaic (PV) plant, a lithium-ion battery system with a 20MWh storage capacity and one of the largest systems for producing hydrogen by electrolysis (20MW). Once built, this will be Europe’s largest electrolyser.
HUGE HYDROGEN COMMITMENT
Building upon this initial project, the partnership includes plans to develop three additional projects in the Fertiberia plants of Puertollano and Palos de la Frontera between 2023-2027, bringing online 20% of Spain’s pledged 4GW of capacity.
“The project is a game change(r) for Spain and Europe as a whole. 800MW in green hydrogen is massive and something special,” a European project finance banker told ICIS.
Another banker at a German lender added, “€1.8bn funding is huge! Iberdrola is a well-known name in the project finance business and it will attract lots of interest. Both firms can use a mixture of bank finance, issuing debt or use their own cash to back this project. Interest in hydrogen is massive especially (as its) costs will gradually fall in the coming years.”
The announcement from Iberdrola doesn’t include renewable capacity assumptions, however as the hydrogen is earmarked to be green, renewable power will need to be sourced for generation.
The hydrogen will be used in industry, a key aspect of the Spanish hydrogen strategy and the basis of the country’s current almost 500,000 tonnes of hydrogen demand.
This means that future hydrogen capacity announcements in Spain may well be focused on building hydrogen production for transport, another key component of the strategy.
SPAIN’S HYDROGEN ROADMAP
The Spanish government approved a hydrogen roadmap earlier this month, targeting 4GW of installed electrolysis power capacity by 2030, meeting 10% of the European Commission’s target.
The roadmap also sets an intermediate goal of installing 300-600MW of power from renewable hydrogen electrolysers by 2024. This is particularly noteworthy, as most national strategies have no mid-2020s target. The commission hopes for 6GW of installed capacity by this time across Europe.
Another objective of the roadmap will be to ensure a minimum of 25% of industrial hydrogen consumption to be of renewable origin by 2030. Spanish hydrogen demand is currently almost entirely met via fossil-fuel produced hydrogen.
Another banker explained that Spain is pushing green hydrogen thanks to its growing solar and wind capacities. “The country (is) an important partner of the European Commission in the implementation of the European Green Deal and the Just Transition Mechanism and is fully committed to its hydrogen initiatives.”
The roadmap is seen as an effective tool in offering a climate-neutral vision for Spain by 2050.
The Iberdrola announcement follows another important development in Europe just last week, when France opened a call for projects for hydrogen production to be funded by its government.
Additional reporting by Jake Stones and Luka Dimitrov