S&P Global Platts assessed the cost of PPA-backed green hydrogen production in Germany at 11.78 euros per kilogram on September 11, a figure the industry treats as a general benchmark but one that describes almost exactly the setup Shell has chosen for Refhyne II. Shell has said the plant will run on “multiple groups of renewable energy power purchase agreements”, the same procurement model underlying that price assessment, against grey hydrogen produced from natural gas, which typically costs one to two euros per kilogram in the same market.
The equipment milestone announced this month, the delivery of the first 14 of 150 required electrolyzer stack modules to Shell’s Energy and Chemicals Park Rheinland in Wesseling, moves the 100-megawatt Refhyne II project from construction to commissioning, with full operation still targeted for 2027. That places roughly three years between Shell’s July 2024 final investment decision and planned startup, following contracts signed with ITM Power for the Trident proton exchange membrane stacks and Linde Engineering as EPC integrator in August of that year.
The project description circulating around this announcement characterizes Refhyne II as built through “expansion and upgrading” of the original 10 megawatt Refhyne I unit, but that earlier plant, which began operating in 2021 as the first PEM electrolyzer deployed at this scale in a refinery setting, concluded operations in June 2024, more than two years before this month’s equipment delivery. Refhyne II is a new, considerably larger installation drawing on the engineering lessons and operational data from that now-shuttered predecessor rather than a physical expansion of a still-running facility.
The funding history behind the project reflects the same subsidy dependence visible across nearly every large European green hydrogen project reaching this stage of development. Refhyne II secured a 32.4 million euro grant from the European Commission’s climate infrastructure agency, CINEA, in October 2020, four years before Shell’s own final investment decision, part of a European Hydrogen Strategy that originally targeted 6 gigawatts of installed EU electrolyzer capacity by 2024. The bloc has missed that target by a wide margin; continent-wide operating electrolyzer capacity remains measured in the hundreds of megawatts rather than gigawatts by most recent industry tracking, a gap consistent with the broader pattern across European hydrogen infrastructure this year of projects advancing on multi-year timelines well behind the schedules originally attached to EU policy targets.
What Refhyne II does avoid, unlike several comparable projects that have stalled over the past two years, is offtake uncertainty. All of its output is committed to Shell’s own Wesseling refinery operations rather than dependent on finding external industrial buyers willing to pay a premium for green hydrogen, the specific gap that has derailed green ammonia and green steel projects elsewhere in Europe when anticipated customers failed to sign binding contracts. Shell’s approach of integrating its own energy trading operations to aggregate multiple renewable PPAs is a genuine attempt to manage the cost exposure the S&P Global Platts assessment quantifies, and running the plant on contracted renewable power rather than spot grid electricity provides more cost predictability than an unhedged approach would, even if it does not close the gap to grey hydrogen pricing.
That gap is the more consequential number for evaluating the “benchmark project” framing attached to Refhyne II’s progress. At roughly six to ten times the cost of the conventional hydrogen it is meant to help displace, based on the September Platts assessment measured against typical grey hydrogen pricing, Refhyne II’s economics depend on carbon pricing under the EU Emissions Trading System, regulatory mandates requiring renewable hydrogen use in refining, or continued public subsidy support rather than on cost parity the project has approached on its own.
That does not diminish the genuine engineering achievement of commissioning one of Europe’s largest PEM electrolysis installations, built on real operational experience from a completed predecessor plant and free of the offtake risk that has stalled other projects, but it does mean the “mature model for low-carbon transformation” other petrochemical operators might draw from Refhyne II is a model whose replication elsewhere still depends on the same policy support structures that made this specific project possible, not on a demonstrated path to standalone commercial viability.
