Spain entrusts Midcat with its strategy to lead green hydrogen in Europe

Spain does not seem willing to give its arm to twist in the construction of the MidCat pipeline.

After the refusal of the French president, Emmanuel Macron, insisted on keeping the debate open within the Twenty-seven, and the first point seems in favor of the Spanish government: European ministers agreed on Friday that a technical group on interconnections assess what infrastructure should be strengthened to arrive on time for the winter 2023-2024, as told at the exit the vice president herself and Minister for Ecological Transition, Teresa Ribera. Just what she had been asking for weeks.

The Spanish objective is strategic: to position itself before anyone else for the future export of green hydrogen on the continent. And the war in Ukraine has opened as a window of opportunity to accelerate the project that the Government does not want to miss.

“The interest for Spain to be a natural gas hub today is a long-term strategy to participate in the hydrogen game. It is publicity to move wills and generate conversations. There are a lot of EU funds at stake and countries are on the hunt,” explains Andrés Schuschny, professor of the master’s degree in renewable energies at the International University of Valencia.

Following the invasion of Ukraine, the European Union (EU) has doubled its green hydrogen targets for 2030 to produce 10 million tons and import another 10 million tons. Today the EU produces 0.6 million tons of gray hydrogen, according to the CEO of Nedgia (Naturgy’s gas distributor), Narcís de Carreras, at the VII Energy Forum of El Economista held last week. “The famous MidCat ultimately has the logic of being one of the great backbones for hydrogen exports from Spain to major European consumers, and this is not something we invented, but rather what the RepowerEU plan says,” defended the CEO of Enagás, Arturo Gonzalo Aizpiri, at the same forum.

Green hydrogen is an energy vector still under development because it is very costly, but it is essential to decarbonize sectors where it is difficult for electrification to reach, such as industry or heavy transport (maritime or aviation). That is why the Government approved last year a PERTE to allocate 1,555 million public euros to the development of this technology. The aim is to create a new industry. And interest is at an all-time high. All the major energy companies, such as Iberdrola, Endesa, Naturgy, Repsol, Acciona and Enagás have launched projects.

The first two calls for PERTE grants launched in December have been a success. One is aimed at pioneering projects and has received more than 126 applications for more than 700 million, more than five times the budget; while the other targets the value chain (improvement of R&D and manufacturing capacities) and has received 92 projects worth 525 million, double the budget, according to sources from the Ministry for Ecological Transition. The government aims to have granted aid for more than 1,000 megawatts of electrolyzers by the end of 2023, with the goal of reaching 2030 with 4,000 megawatts of power installed and 25% of industry consumption.

Much to be done

The challenge is enormous. And Spain is competing with other countries that are starting from the same point. According to Marta Sánchez, the partner in charge of Energy Strategy and Consulting at EY, at the El Economista forum, Spain is more advanced on the supply side (due to the country’s high level of renewable generation) but not on the demand side. In the UK, for example, there are already pilot projects for hydrogen boilers. “We have to balance the complexity of developing demand and supply at the same time,” agreed Redexis CEO Fidel López Soria at the same forum.

The Spanish government has made progress in the regulation, with the creation of a system of guarantees of origin, a kind of certificate that makes it possible to differentiate clean gases from those of fossil origin. But there is still much to be done, such as an integrated planning of electric and gas energy, according to the general manager of Reganosa, Emilio Bruquetas, and the CEO of Enagás, Arturo Gonzalo Aizpiri, because for the production of renewable hydrogen a greater installation of solar and wind power is needed than is foreseen in the current electric planning, and a specific regulation that anticipates the problems that may arise.

France’s brake

Once Spain succeeds in producing green hydrogen, the next step is to export it. And that is where the ‘new’ Midcat comes in (according to Professor Andrés Schuschny, hydrogen is more corrosive and volatile than gas, so to transport the new fluid, a plastic coating and synthetic elements are required to avoid leaks at the stopcocks; to get an idea, a pipeline can currently only contain 5% hydrogen and the remaining 95% must be natural gas). This debate could take a few years, but the war opens up an opportunity. “It makes sense to accelerate its construction to use it for gas in an initial phase because Europe needs this gas,” said Gonzalo Aizpiri, who recognizes a bottleneck in the current interconnections: “We see it and the French TSOs (gas system operators) see it.

Despite this theoretical evidence, the French president denied the major and rejected the pipeline a few weeks ago. The Spanish government is sympathetic to its neighbor. In addition to its difficult electricity situation (with more than half of the nuclear plants shut down), the construction of the French section of the gas pipeline is “much more complicated” (and costly) than the Spanish part, as Ribera explained in a forum organized by Infolibre. “At the moment they are concerned about the electricity system and have to organize their national priorities,” Ribera acknowledged, but also added: “There is a point of incoherence when Europe stresses that it is essential to use infrastructure in a smarter way and use all complementarities and that this is in the European interest and, however, then not participate in the debate on what is in the European interest and how to solve the technical or financial problems that may exist and leave it to the decision of one or two countries. Two do not fight if one does not want to, but it is very difficult for two to agree if one does not want to. And it is unfair because it is not a question of imposing anything on anyone, but to see how to reconcile the European interest. Therefore, I believe that it is not a closed debate and our position must be that of availability for the whole of Europe”.

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