Portugal’s leading oil company, Galp, is on track to make a final investment decision by the end of the year regarding its first 100-megawatt (MW) green hydrogen unit.
However, the company is still awaiting clarification on certain regulatory and tax matters, according to a company official. The Sines refinery, located south of Lisbon, currently relies on hydrogen derived from natural gas, but Galp aims to shift towards producing zero-carbon hydrogen through electrolysis using renewable energy sources.
Producing green hydrogen through electrolysis is currently more expensive compared to traditional methods that rely on coal or natural gas and produce significant carbon emissions. Nevertheless, Galp is committed to accelerating its decarbonization efforts and plans to allocate approximately 50% of its capital expenditure towards low-carbon activities by 2025.
Sergio Machado, Galp’s head of hydrogen, revealed to Reuters that the company is nearing the final investment decision for the 100 MW electrolyzer and hopes to reach it later this year. Machado emphasized that Galp is technically and commercially prepared for the project but requires clarity on regulations and tax stability from European and Portuguese authorities.
The 100 MW electrolyzer represents just the initial phase of Galp’s ambitious plans at the Sines refinery. The company envisions a total green hydrogen capacity of 600 to 700 MW, leveraging its role as the primary recipient of green hydrogen as a distinct advantage compared to other projects in Europe.
Galp intends to utilize the green hydrogen produced to generate green ammonia or synthetic fuels. As the project scales up, the company may also consider selling green hydrogen to transportation companies and highly polluting industries, further driving the transition to cleaner energy sources.
Energy Secretary Ana Fontoura recently stated that Portugal already has solid investment commitments for hydrogen plants, with capacities potentially doubling or even tripling the government’s forecast of 2.5 GW by 2030.
In addition to its individual efforts, Galp is collaborating with EDP-Energias de Portugal on another 100 MW electrolyzer project in Sines, highlighting the collective commitment of key players in Portugal’s energy sector to advance the development of green hydrogen infrastructure.