The challenges that Spain must overcome in its race for green hydrogen

Spain wants to become the European leader in hydrogen produced exclusively from renewable energy, say, green hydrogen. With plenty of sun and wind and large open fields to house these energy sources, the country’s ambition is to export the gas to the rest of the continent.

As the price of solar energy continues to fall, Spain is committed to quickly building a supply chain for the sectors of the economy that require hydrogen for industrial processesand that they have had a more difficult time stopping the use of fossil fuels.

Critics of this goal warn that there is not enough renewable energy capacity to produce green hydrogen that can replace natural gas and coal for the manufacture of petrochemicals, steel and agricultural products.

But the supporters of this strategy trust in the plans that the country has established to get a head start on establishing yourself in the nascent green hydrogen economy. The International Energy Agency estimated in December that Spain would represent half of Europe’s growth in renewable capacity dedicated to hydrogen production

“The point of the rush is that everyone seems to be competing to be the first to export green hydrogen”says Alejandro Núñez-Jiménez, an expert on green hydrogen policy at the Swiss Federal Institute of Technology in Zurich. “Once you build the energy infrastructure, it will stay there for decades. So it really is a first come first serve game that will control the situation for many years,” he adds.

The Puertollano green hydrogen plant

An example of the potential of green hydrogen can be seen in Puertollano (Castilla-La Mancha), a former mining town that now houses a large industrial park where the company Iberdrola and the fertilizer manufacturer Fertiberia have partnered to create the world’s first carbon-neutral plant nutrients. The fertilizer will one day be applied to malted barley, which will then be used to make the Heineken company’s first “green malt” drink.

Etienne Strijp, president of Heineken Spain, emphasized the difficulty of eliminating carbon in the agricultural process. “Being carbon neutral throughout our value chain represents a huge challenge,” states the company’s plan to produce green malt.

The Puertollano green hydrogen plant, the largest operating facility in Europe, is currently in pilot phase. Iberdrola owns the 100-megawatt solar panels that power the electrolysers responsible for separating oxygen from hydrogen in the water. Huge hydrogen storage tanks then carry the gas through pipelines to Fertiberia, where it is used to produce ammonia, the fundamental chemical in nitrogenous fertilizers.

Synthetic fertilizers are currently a highly polluting product. A recent study showed that fertilizers emit the equivalent of 2.6 gigatonnes of carbon per year, or more than global aviation and shipping combined. A third of these emissions come from the production of fertilizers in plants such as Fertiberia.

“We have green hydrogen for these sectors that are difficult to transform, so that we can achieve the goal of a fully decarbonized economy,” said Javier Plaza de Agustín, who heads Iberdrola’s green hydrogen section.

The plant has the capacity to reduce Fertiberia’s emissions by only 10%Therefore, most of the hydrogen from the fertilizer firm continues to be extracted from natural gas, through the so-called “grey” hydrogen (obtained with hydrocarbons, as opposed to green hydrogen, obtained with renewable energies). However, the company plans to be 100% carbon neutral by 2035.Two great pending challenges

In these early stages of development, the challenges facing green hydrogen in Spain are several.

The first is the cost. Javier Goñi, general director of Fertiberia, points out that green hydrogen technology still does not offer a profitable final product.

Spanish companies are pushing for EU subsidies similar to the recent announcement of $750 million for hydrogen research and development projects in the United States. They argue that subsidies are essential to grow the market, so that economies of scale make zero-carbon products cost competitive.

“Right now, we are at such an early stage that we need that help from public authorities to fill the funding gap”, indicates Plaza de Agustín. “Without that, it’s hard to invest in a plant for 20 or 25 years without knowing what’s going to happen.”

The executive commission of the European Union has proposed that member states produce 10 million metric tons of renewable hydrogen by 2030 and import a further 10 million metric tons. Last month, the European Commission announced measures to create an intra-EU hydrogen market and assess infrastructure needs.

But The second problem is that the EU’s promise to increase supply comes without knowing where the demand really is, argues Núñez-Jiménez, an expert in hydrogen.

“Spain and Portugal could produce a lot of green hydrogen, and the demand in Central Europe may materialize, but the connection between supply and demand does not yet exist,” he said. “Developing the infrastructure to transport this gas from the Iberian Peninsula to the center of Europe must be a priority.”

Hydrogen, the lightest element on the periodic table, is difficult to store and transport and is highly flammable. For this reason, Iberdrola built its hydrogen plant right next to the Fertiberia factory, to minimize leaks. Once Iberdrola and its competitors have met Spain’s limited hydrogen needs for things like brewing beer, they will need to look beyond their borders to continue growing.

Few companies and little demand

“Everyone wants to be in the production of hydrogen,” said Goñi from Fertiberia. “But today, there are basically few companies and few sectors of activity that can absorb large amounts of hydrogen.”

Alliances are key. The ammonia created at the Fertiberia plant with Iberdrola’s green hydrogen could be used to transport hydrogen in liquid form before it is converted into a gas.

Lhe decarbonization of hydrogen for industry has taken on greater importance in Europe since the Russian invasion of Ukraine. Russia is the world’s second largest producer of natural gas, which currently powers most of the world’s hydrogen production.

Spain, France, Germany and Portugal agreed to build a hydrogen pipeline by 2030 to transport some 2 million metric tons of hydrogen to France annually, 10% of the EU’s estimated hydrogen needs.

environmental repairs

But not everyone in Spain wants a hydrogen plant just around the corner. Land use for renewable energy facilities and the 9:1 ratio of water per pound of green hydrogen produced can be a hard sell for regions suffering from severe and prolonged drought.

Pere Virgili, mayor of the northeastern coastal town of Roda de Bera, rejected an initial proposal from a green hydrogen developer last year that would have covered 42 hectares of territory with a combination of solar panels and wind turbines to power its electrolysers.

“It’s not that we’re against renewable energy, but you have to see if using so much water and land to create it is really respectful of the environment or not,” he said, adding that the project would create only 100 jobs.