The European Commission has approved a significant investment of €1.2 billion to support Spain’s nascent green hydrogen sector.
This funding, sourced from Spain’s share of the post-Covid EU recovery fund, aims to advance zero-carbon, renewable energy projects across Europe.
The investment will allow production plants and factories with a capacity of 100 megawatts or more to bid for funding to develop ‘hydrogen valleys’. These projects may include the production of renewable fuels derived from hydrogen, hydrogen storage, and renewable electricity generation. Spain already has one such hydrogen valley—GreenHysland—on the island of Mallorca. While the concept of hydrogen valleys is innovative, their actual implementation and scalability remain to be seen.
Spain has set an ambitious target to achieve 11 gigawatts of electrolyser capacity for green hydrogen production by 2030, the highest in Europe. This goal surpasses the EU’s overall target of producing 10 million tonnes of green hydrogen annually. However, it’s important to compare Spain’s aspirations with actual progress in other European countries. Nations like Germany and the Netherlands are also making significant strides in green hydrogen production and infrastructure, which provides a benchmark for evaluating Spain’s efforts.
Green hydrogen, produced by the electrolysis of water, offers a cleaner alternative to grey hydrogen derived from fossil fuels. The environmental benefits are clear, as green hydrogen production significantly reduces greenhouse gas emissions. However, the cost and energy efficiency of green hydrogen production are critical factors. The current high cost of electrolysis technology and the need for abundant renewable energy sources pose challenges to large-scale adoption.
The European Commission’s executive vice-president for competition policy, Margrethe Vestager, stated that the investment plan aligns with the EU Hydrogen Strategy and the European Green Deal. She emphasized that it would help reduce Spain’s dependence on imported fossil fuels while minimizing potential market distortions. However, the effectiveness of this investment in fostering fair competition within the EU market remains to be assessed. The allocation of subsidies and their impact on smaller players in the market need careful consideration to avoid creating an uneven playing field.
