The proposed €133.4 million subsidy to Repsol for the Atlas electrolyser project at its A Coruña refinery complex is structured around a production premium of €2.20 per kilogram of renewable hydrogen, more than four times the premium that winning projects secured in both the first and second European Hydrogen Bank auctions, where clearing prices ranged between €0.20 and €0.60 per kilogram for the general project category.
That gap raises a specific question: whether the Spanish national funding framework, channelled through IDAE and the Recovery and Resilience Facility, is pricing industrial green hydrogen support at levels that reflect a fundamentally different cost structure than the utility-scale production projects that cleared at competitive EHB auction prices, or whether it reflects the higher cost structure of integrated refinery hydrogen rather than standalone green hydrogen production.
The distinction matters for how the subsidy is evaluated. Atlas is not a standalone green hydrogen production project seeking merchant offtake. It is a 50 MW PEM electrolyser integrated into Repsol’s existing industrial complex in Arteixo, with the explicit purpose of replacing grey hydrogen currently produced from fossil fuels in refining processes. The hydrogen does not need to be sold, transported, or matched with an external buyer at a market price. It substitutes a captive internal feedstock with a known cost. The economics of industrial substitution and the economics of green hydrogen production for merchant or maritime markets are structurally different, and the premium required to make them viable reflects those differences.
What €2.20 per Kilogram Actually Covers
Grey hydrogen produced via steam methane reforming costs approximately €1.50 to €2.00 per kilogram at current European gas prices. Green hydrogen produced from renewable electricity in Spain, a country with some of the continent’s lowest levelised costs for solar generation, was assessed at an average production cost of approximately €5.50 per kilogram across bidders in the second EHB auction. The spread between grey and green hydrogen production costs at industrial scale in Spain is therefore roughly €3.50 to €4.00 per kilogram at current energy prices. A premium of €2.20 per kilogram from the national support scheme, combined with any carbon cost savings from avoided grey hydrogen emissions under EU ETS pricing, narrows but does not fully close that gap without assuming significant cost reductions from the electrolyser’s integration with existing refinery infrastructure and a declining renewable electricity price trajectory.
The project’s ten-year production target of 60,634 tonnes of renewable hydrogen implies average annual output of approximately 6,063 tonnes from a 50 MW PEM system. At industry-standard load factors for PEM electrolysers operating on renewable electricity, 50 MW of capacity would typically produce between 2,000 and 3,000 tonnes per year at 40 to 60% load factor. Producing 6,063 tonnes annually would require either a significantly higher utilisation rate or grid electricity supplementation, which has implications for the renewable certification of the hydrogen under EU delegated regulations defining renewable fuels of non-biological origin, the standard that determines eligibility for European Hydrogen Bank and related support schemes.
The Route to Funding and What It Reveals
The Atlas project’s access to this funding allocation followed Iberdrola’s withdrawal of its applications for the Noon II and Odin projects, which opened budget headroom that allowed Atlas and the Puertollano Hydrogen Network, also promoted by Repsol Renewable and Circular Solutions, to enter the selected list. The sequencing illustrates a structural feature of the Spanish national hydrogen support pipeline: funding availability depends partly on the participation decisions of other developers, creating an indirect competitive process that differs from the direct auction mechanism the European Hydrogen Bank uses. Iberdrola’s withdrawal suggests its projects were not viable at the subsidy levels available, which is itself a signal about the cost threshold at which utility-scale electrolysis projects in Spain require support to proceed.
The third European Hydrogen Bank auction, which closed in February 2026 and awarded over €1 billion to nine projects, attracted 58 bids resulting in oversubscription of more than six times the €1.3 billion budget, with Spain and Germany participating through the Auctions-as-a-Service feature adding a further €1.7 billion in national funds. That level of competition for EHB funding at premium prices below €0.60 per kilogram for general projects contrasts with a national support mechanism offering €2.20 per kilogram to an industrial substitution project. The two mechanisms are not directly comparable, but the coexistence of competitive auctions clearing below €0.60 per kilogram and bilateral industrial support at €2.20 per kilogram within the same country and policy framework raises questions about whether the support architecture is efficiently allocating public funding across different green hydrogen applications.
The Payment Structure and Its Incentive Logic
IDAE’s proposal incorporates a production-linked payment structure rather than an upfront capital grant, with disbursements made every six months conditional on verified renewable hydrogen production over a maximum ten-year period. This design correctly aligns public subsidy with actual decarbonisation delivery rather than project construction, and it imposes ongoing performance obligations that a one-time capex grant does not. Repsol must justify hydrogen output to IDAE on a semi-annual basis, and payment depends on meeting production thresholds. The structure is also consistent with how the European Hydrogen Bank organises its own premium payments, where support is tied to hydrogen produced rather than capacity installed.
The timeline requirements attached to the proposal are consequential. Repsol must obtain integrated environmental authorisation within 24 months, make its final investment decision within 30 months, and have the plant operational within 60 months of the resolution’s publication. A 50 MW PEM electrolyser integrated into an existing refinery complex is not a large infrastructure project by the standards of the current European hydrogen pipeline, and 60 months from resolution to operation is achievable if permitting and equipment procurement proceed on schedule. PEM electrolyser equipment lead times have lengthened as demand has grown, but the major manufacturers including ITM Power, Nel, and Siemens Energy have been expanding capacity. The 24-month environmental authorisation window is the more uncertain element, given the regulatory complexity of modifying a large industrial complex’s authorisation profile.
The subsidy does not yet confer a legal right against the administration. Repsol has five business days to formally accept, and the full resolution remains provisional until that acceptance is registered. Whether Atlas proceeds will therefore depend on the company’s internal assessment of whether the €2.20 per kilogram premium is sufficient to make the project commercially viable over a decade, given the capital cost of the 50 MW PEM installation, the electricity price assumptions underpinning its operating economics, and the ongoing cost of grey hydrogen that the project is designed to replace.
