Green hydrogen is increasingly discussed by companies and institutions as a potential future substitute for natural gas. In Spain’s Castellón region, expectations are notably high, with the tile industry playing a central role in the local economy. The province’s ceramic sector consumes substantial amounts of natural gas to power its high-temperature processes, and this has spurred several projects positioned near the tile cluster to explore hydrogen as an alternative energy source. Among the efforts underway, a high-profile initiative involves BP and Iberdrola planning on the Serrallo de Castellón industrial estate. While these developments mark important milestones, the technology remains experimental, and many steps lie ahead before hydrogen can offer a truly reliable substitute.
The clearest signal comes from markets. The European Energy Exchange, a leading reference in Europe for energy trading, introduced the i.Hydrix index to reflect green hydrogen pricing. This launch confirms concerns that have persisted for years: hydrogen costs are significantly higher than natural gas, shaping the early economics of hydrogen adoption in Europe and beyond. The implications are felt by manufacturers and regulators who monitor energy costs and energy security in North America as well as Europe.
The result of the premiere
Early price indicators show a gap between hydrogen and traditional fuels. Current data point to values around 231.6 euros per megawatt-hour for hydrogen benchmarks, compared with peak natural gas prices that surged to roughly 345 euros in the previous year. On the Dutch TTF market, which serves as a European benchmark, hydrogen prices have not yet shown sustained upside, often trading in a range that remains notably higher than gas but less volatile than some earlier forecasts. At present, hydrogen costs remain substantially higher—roughly eight times the price of conventional fuels—keeping hydrogen from immediate price parity on most European trading platforms. This disparity influences investment decisions, project viability, and the pace at which North American industries may adopt hydrogen as an alternative—especially in sectors like ceramics, steel, and refining.
“A long way”
Alberto Echavarria, general secretary of the Ceramic Manufacturers Association, has commented on the hydrogen market’s early signals. From the perspective of the ceramic sector in Castellón and similar regions, the industry recognizes both the promise and the hurdles. He notes that while there are certainties about hydrogen’s potential to decarbonize energy-intensive processes, the path forward is strewn with challenges. The sector not only faces the technical task of scaling production and integration but also an economic one, with prices far above current gas costs. In practical terms, the financial gap may compel plants to reassess operating models, energy contracts, and long-term capital plans as they explore hydrogen as a substitute for natural gas. Industry leaders caution that the journey will extend beyond technology alone, requiring policy support, infrastructure development, and competitive electricity prices to unlock hydrogen’s full value.
The economic challenge is real: even if production scales up, a substantial cost reduction is needed for hydrogen to enable widespread substitution of traditional fuels. This ongoing price premium has the potential to influence industrial budgeting, plant retrofits, and compensation structures for energy-intensive tasks. Observers in North America and Europe alike are watching closely, understanding that a breakthrough in pricing or supply chain efficiency could accelerate adoption across multiple sectors.
question marks
The ultimate test for hydrogen lies in its ability to become economically viable at scale. In Castellón and similar manufacturing hubs, analysts will assess whether large-scale production can help push prices downward. This depends on several intertwined factors, including advances in electrolyzer technology, access to clean electricity, and improvements in storage and transport. Equally important are policy and regulatory environments that incentivize clean energy while ensuring grid reliability and cost recovery for investors.
In summary, the near-term outlook for green hydrogen remains mixed. The technology shows real potential to decarbonize durable, energy-intensive industries, yet price gaps, investment requirements, and developmental milestones create a long runway before hydrogen becomes a common substitute for natural gas. Stakeholders in North America and Europe are increasingly aligning on strategies that pair pilot projects with scalable, cost-competitive models. The road ahead will involve not only technical breakthroughs but also market mechanisms and infrastructure investments aimed at reducing total costs and widening access to clean energy options across multiple sectors.