Spain poised to become hydrogen producer in the north of the European Union

Every summer, thousands of tourists from northern Europe flock to the airports to sunbathe on the beaches of Spain. The image has been repeated every year for 50 years, but now its relevance to the Spanish climate has another meaning. Its nearly 300 sunny days have made it possible to triple the production of photovoltaic solar power in the last three years, and together with the good memory of wind power, it has made Spain an attractive place for cheap green hydrogen production. The industry’s calculations point to a production of 21,000 million cubic meters per year, equivalent to 2 million tons of hydrogen, after 2030. It will represent 20% of the expected production by the European Union and especially the northern countries..

“Spain has great potential to become Europe’s hydrogen hub alongside Portugal,” says Bruno Esgalhado, a partner at McKinsey & Company, but the infrastructure limitations of its neighboring country give it an added advantage. 2,500 hours of sunlight per year has allowed photovoltaic energy production to triple.According to data from Red Eléctrica, the country’s wind energy together with 52.5% accounts for more than half of the energy produced in Spain.

This is good news for green hydrogen production: the price is falling, relying mostly on renewable energy. “As the Iberian Peninsula has the cheapest energy cost in Europe, green hydrogen can be offered at more competitive prices from countries like France or Germany,” adds Esgalhado. In particular, Javier Brey, president of the Spanish Hydrogen Association (AeH2), explains:It is considered to be produced around 1-2 euro/kilogram. (less than half the current cost of between 5.5 and 6.5 euros/kilogram) by 2030” compared to 2 euros/kilogram in other European countries. According to the International Renewable Energy Agency (IRENA), Spain will become the eleventh country in the world to produce the cheapest green hydrogen and the first in Europe.

Hydrogen on land and sea

The European Commission aims to locally produce and use 10 million tons of green hydrogen per year by mid-2030 to move towards decarbonization and eliminate energy dependence. To reach 600 MW of electrolysis power of 300 megawatts (MW) by 2024 and 4 gigawatts (GW) of green hydrogen for national consumption by 2030. According to Cepsa’s estimates, these data If we envision 2040 and 2050, “it could be more than double so we can export 50%””, says Joaquín Rodríguez, director of hydrogen. The Netherlands, Germany, the United Kingdom and northern France are among potential customers due to their high energy demands: “They are looking for this renewable energy solution because they fear their industry will be displaced,” says Rodríguez.

This export target is already present in some of the most relevant projects proposed to reach Northern Europe both by land and sea. On the ground, the first hydrogen corridor in the European Union stands out, H2Medwhich will connect Portugal, Spain, France and Germany with an estimated investment of 2,500 million euros.. BP will be one of the Valencia Community Hydrogen Cluster companies to export some of the green hydrogen through this corridor and will be encouraged by them: “Spain is not only energy independent, but also energy exporter,” they affirm from the company.

Another cross-border tube will be the hydrogen-carrying tube between Celorico da Beira (Portugal) and Zamora. Enagás designed two large internal hydro channels It will connect the production centers of this type of energy with industrial consumption poles and two underground storage facilities. The plan to connect Huelva, Puertollano (Ciudad Real), Zamora and Gijón on the one hand, and Gijón, Barcelona and Cartagena on the other, totals 4,926 million euros. The warehouses will be located in Cantabria and the Basque Country.

Leading in the maritime field HE runner Introduced by Cepsa and the port of Rotterdam To export 4.6 million tons of green hydrogen from the port of Algeciras in 2030. The energy will be produced in the San Roque Energy Park, located around the Bay of Algeciras, and they chose the Dutch port operator because “more than 13% of the energy is the entry point to northern Europe. Europe is requested to enter this port by sea,” explains Rodríguez.

Besides playing a key role in the export of green hydrogen, Spain a very important role as a concentrator of this energy. “It’s worth noting that other geographies, such as Latin America or the Mediterranean coast, from Morocco to Egypt, will also want to export hydrogen to that northern Europe,” Brey said. Far from being a threat to becoming an energy “centre”, the head of AeH2 points out, this is good news, “because the natural entry point for this Latin American and Mediterranean green hydrogen in Europe will often be the Iberian Peninsula”.

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Increase in green hydrogen production is expected from multiple sectors, but mainly by those with difficult electrification. “We’re talking today about industries that are heavily consuming fossil-derived hydrogen, called gray hydrogen, which comes from reforming natural gas,” they say from BP. Ceramics, chemistry or mobility (mainly heavy transport) that make up the thermo-intensive industries will be the next sectors to benefit from such clean energy. In general, its use in addition to its price will depend on this, as “any polluting activity is economically penalized”. “Then there will be a time when prices can stabilize and Spain will position itself as one of the largest producers and exporters,” says Marciano Sánchez, head of the consulting and training unit of the National Hydrogen Centre.

First, Sánchez says, the biggest challenge is to “support investments in the short, medium and long term to ensure that enough green hydrogen is available to meet energy needs.” According to calculations by McKinsey & Company, to meet the net zero emissions commitment “a Annual investment of 85,000 million euros per year in Spain until 2050”. For now, the Government has given an initial €200 million in aid to promote 37 green hydrogen initiatives, with a further €140 million to be added in the coming weeks. Renewable Energies, Renewable Hydrogen and Storage Port (PERTE ERHA) will allocate more than 16,300 million Euros between special funds and contributions from the Recovery, Transformation and Resilience Plan.