However, when you scratch beneath the surface, you see that there is still a significant gap between what has been announced and what is actually happening. Few megawatts are operational compared to the tens of gigawatts planned, regulations are still being established, and the technological, economic, and infrastructure challenges remain enormous. This article provides a detailed overview of hydrogen's role in the energy transition, the current situation in Spain, European and national aid, and the main... challenges that condition the deployment of this energy vector.
The role of hydrogen in the energy transition
Modern interest in hydrogen as an energy carrier did not arise from nothing: it responds to the need to achieve climate neutrality, as set after the 2015 Paris Agreementwhere the international community committed to limiting the increase in global temperature to well below 2°C and aiming for 1,5°C. To achieve this, it is not enough to directly electrify everything possible; renewable fuels are needed to fill the gaps where electrification is difficult.
In this context, hydrogen (especially that produced with renewables) appears as a key element for decarbonizing sectors that are difficult to reduce: high-temperature industrial processes, steel production, fertilizers, aviation fuels or maritime transport, as well as certain applications of heavy road transportFurthermore, its derivatives—ammonia, methanol, or synthetic fuels—allow energy to be transported over long distances and can serve as fuel in applications where pure hydrogen is impractical.
The use of hydrogen, however, is not new. It has been used extensively for decades in oil refining, ammonia production for fertilizers, methanol synthesis, and other chemical applications. The difference is that, until now, it has been produced almost entirely from natural gas or coal, generating between 9 and more than 20 kg of CO₂.2 per kilogram of fossil hydrogenThe intended leap involves replacing polluting hydrogen with low-emission hydrogen and, at the same time, expanding its use to new sectors.
Among the various low-carbon production methods, the one that attracts the most regulatory and financial attention is the electrolysis of water powered by renewable electricity. The process is relatively simple to describe: an electric current separates water into hydrogen and oxygen, and if the electricity comes from wind, solar, or other renewable sources, the result is hydrogen considered green or renewable. In practice, the key lies not only in the technology but also in how requirements such as the additionality, geographical correlation, and temporal correlation between renewable electricity and the electrolyzer, established by European regulations to avoid an indirect increase in emissions from the electricity system.
Although hydrogen's potential is enormous, it's important to temper short-term expectations. Building a new global energy sector takes time. mature technologies, reduce costs, develop regulations, consolidate supply chains and, above all, generate real and sustainable demand that provides an outlet for the production of renewable hydrogen and its derivatives.
Production and consumption of electrolytic hydrogen in Spain
Spain has positioned itself among the European countries with the greatest ambitions in renewable hydrogen. The draft update to the National Integrated Energy and Climate Plan (PNIEC) raised the electrolysis capacity target to 11 GW by 2030, almost tripling the 4 GW goal of the 2020 Renewable Hydrogen Roadmap. This increase is no coincidence: it reflects the surge in announced projects and the desire to leverage the country's abundant solar and wind resources to establish itself as a major player in the sector. producer and exporter of hydrogen.
The Chair of Hydrogen Studies at the Pontifical University of Comillas maintains a database which compiles public information on projects announced since 2020, combining sources such as the International Energy Agency and the Spanish Hydrogen Association. According to this registry, at the time of writing the study, there are 166 renewable hydrogen production projects in Spain, with a combined capacity of approximately 22 GW of electrolysis, that is, double the PNIEC objective for 2030.
However, when examining the stage of development of these initiatives, the picture changes. Only around 3% of the projects are actually operational, 5% are under construction, while approximately 23% have secured some form of public funding (national or European), and the remainder—more than 70%—remain in the early design or feasibility study phases. In terms of installed capacity, less than 1% of the announced capacity is operational or under construction; the bulk is divided between projects in the planning stage and those that are partially subsidized, highlighting the significant gap between the advertisements and tangible reality.
Regarding end uses, the information is not always detailed, but it is clear that a majority of the planned capacity is earmarked for the industrial sector. There are projects for refining, ammonia production, methanol, green steel, industrial heat generation, and various chemical raw materials. In parallel, numerous initiatives related to transportation have been announced, although many of them involve low-capacity electrolysis. hydrogen refueling stations for trucks and busesnatural gas blending projects or solutions rail and maritime mobility based on derivatives such as renewable methanol.
In terms of volume, projects linked to the production of green ammonia—both for domestic consumption and export—and those focused on hydrogen steel, such as the well-known HyDeal project, stand out. Also noteworthy are the plans to produce green methanol on a large scale, which could reduce imports and open the door to exports to other European countries, utilizing both maritime and rail transport. synthetic fuels of renewable origin.
European subsidies for renewable hydrogen
Behind the (albeit still incipient) takeoff of the hydrogen sector lies a significant network of European public aid designed to accelerate the deployment of low-carbon technologies. The EU has structured this impetus through several key instruments, including the Innovation Fund, the so-called European Hydrogen Bank, and the Important Projects of Common European Interest (IPECs). Hydrogen-related IPCEIs.
The Innovation Fund is financed by revenues from the European Union Emissions Trading System (EU ETS) and is geared towards supporting cutting-edge decarbonization technologies. It offers two main funding lines: one for small-scale projects and another for large-scale projects with capital investments exceeding €7,5 million. In the calls for proposals awarded to date, hydrogen has gradually gained prominence, moving from being concentrated in small projects in the first wave to including several large-scale projects in the third call, where Five Spanish projects were approved hydrogen production as major beneficiary projects.
The European Hydrogen Bank is another key pillar. Announced in 2022, it is also financed through the Innovation Fund, but is exclusively focused on renewable or low-carbon hydrogen projects. Its flagship mechanism is the production premium auction: the first auction offered €800 million, with a maximum price of €4,5/kg of hydrogen, subsidizing the difference between the actual cost and this cap. The winning projects, several of which are on the Iberian Peninsula—three of them in Spain—must become operational within a maximum of five years from the signing of the contract, which puts pressure on meeting deadlines. electrolyzer start-up.
The European Commission has already announced a second auction of the European Hydrogen Bank with a larger endowment, around 1.200 billion euros, and a lower maximum price, of €3,5/kg of H2It is expected that deadlines, guarantee requirements, and other parameters will also be adjusted, which should further refine the design of these incentives to make them attractive, but at the same time budget-efficient and aligned with the RePowerEU objectives.
In addition to the Innovation Fund and the Bank, the hydrogen IPCEIs play a key role in structuring pan-European projects that cover the entire value chain. To date, four major IPCEIs have been approved: Hy2Tech (hydrogen technologies), Hy2Use (industrial applications), Hy2Infra (infrastructure), and Hy2Move (mobility). Spain participates in several of them with companies dedicated to the design and manufacture of electrolyzers, value chain components, mobility solutions, and large industrial projects such as hydrogen valleys and renewable energy production plants integrated into complexes chemicals and steel industry.
The financing of IPCEIs ultimately falls to the Member States, once the European Commission authorizes the State aid. In the case of Spain, these contributions are channeled primarily through the PERTE program for renewable energy, renewable hydrogen, and storage (PERTE ERHA), which includes a specific line of funding to integrate the national value chain into European hydrogen projects and facilitate the participation of Spanish companies in these consortia. of a cross-border nature.
National aid for hydrogen: PERTE ERHA and other programs
Domestically, Spain has structured much of its aid related to the energy transition through the Recovery, Transformation and Resilience Plan (PRTR), which channels Next Generation EU funds. The PRTR has approximately €163.000 billion in grants and loans, distributed over six years, and is based on the PERTE as the central axis to mobilize investments in strategic sectors.
Renewable hydrogen is primarily integrated into the PERTE ERHA program, which in its original design had a budget of €6.6 billion, of which €1.555 billion was specifically earmarked for hydrogen. With the subsequent addendum, the overall PERTE budget rose to almost €10.8 billion, and the allocation for hydrogen increased by approximately €1.6 billion, bringing the total investment to nearly €10.8 billion. 3.200 billion for this energy vector.
National funding for renewable hydrogen has been organized into four main lines: the first focused on boosting R&D, innovation, and SMEs in the value chain; the second aimed at creating large clusters or hydrogen valleys, where production, processing, and consumption are concentrated; the third for pioneering, unique projects that introduce hydrogen into industrial hubs or isolated systems; and the fourth specifically designed to support Spanish participation in European projects and initiatives such as the IPCEI.
To date, several calls for proposals associated with the PERTE ERHA program have been resolved, with an executed budget of approximately €624 million out of the initial €1.555 billion allocated to hydrogen. Among the subsidized projects, 39 correspond directly to hydrogen production, accumulating a total electrolysis capacity of 772 MW. These projects must be operational within approximately three years of receiving the grant, placing their commissioning between 2025 and 2026 if the deadlines are met. construction and commissioning.
The high demand for these financing lines demonstrates the sector's strong investor appetite. For example, in the latest call for proposals for the H2 Pioneers program, around 100 applications were received for a combined capacity of 1.267 MW of electrolysis, of which only 12 projects, totaling approximately 309 MW, received funding. This gap between applications and awards indicates both the dynamism of the market and the need to continue approving support programs so that a larger proportion of projects can benefit. move from the announcement phase to actual deployment.
In the short term, new calls for proposals are planned for hydrogen valleys and to strengthen the value chain. These have already undergone a public consultation phase and are expected to mobilize additional resources. Furthermore, a certain geographical concentration of subsidized projects is observed in areas such as Gijón. HuelvaSeville, Algeciras, Tarragona, and Zaragoza are emerging as genuine hydrogen clusters. In contrast, other regions with many announced projects, such as Castile and León, have so far only obtained a few [units/projects]. specific awards of public support.
Technological, economic and resource challenges
Comparing the ambitious targets and large number of projects in the pipeline with the few megawatts actually operational makes it clear that the hydrogen sector faces a host of challenges. These challenges range from cost reduction and resource management, such as water, to demand creation and the development of transport and storage infrastructure—all of which are essential for annual hydrogen statistics to reflect sustained growth and not just an accumulation of unrealized potential. announcements and press releases.
The first major obstacle is economic: the cost of producing renewable hydrogen remains high compared to its fossil fuel alternatives. What is known as the “green premium”—the difference between the cost of low-carbon hydrogen and the cost of conventional fuels or raw materials—varies considerably depending on the sector, gas prices, and CO2 emissions.2Regulatory pressure or the commercial value that end customers place on decarbonized products are all factors. In some niches, the gap is small and manageable; in others, it is still too wide to justify investments without public support or robust long-term contracts.
For hydrogen to be competitive in the long term, efforts are focused on reducing its levelized cost of hydrogen (LCOH), that is, the average cost per kilogram of hydrogen produced over the plant's lifetime. This involves lowering investment in electrolyzers and auxiliary equipment by leveraging economies of scale and learning curves, but also optimizing plant design to maximize equivalent operating hours, adjust pressure and purity to meet customer requirements, and ensure flexible operation that allows for better utilization of the available renewable electricity.
Variable costs have a dominant impact on the LCOH, especially the cost of electricity, which can represent between 60% and 70% of the total production cost. Furthermore, this electricity must comply with European regulations to be considered renewable for the purposes of calculating non-biological renewable fuels. Therefore, the energy procurement strategy (PPAs, dedicated plants, direct lines, deviation management, etc.) is a decisive factor for the profitability of any project. electrolytic hydrogen projectTo better understand the context of electricity prices in Spain, it is useful to consult specific analyses on why Spain sets low prices in the wholesale market and how these are (or are not) passed on to the final bill.
Another aspect often overshadowed by electricity is water, a basic input for electrolysis. Although its economic cost per kilogram of hydrogen is usually low—even considering desalination, which would barely increase the final cost by around 1%—physical access to the resource can limit projects in water-stressed areas. Consumption estimates indicate that even if Spain were to reach 11 GW of electrolysis operating for thousands of hours per year, the total volume of water required would be very small compared to agricultural irrigation or urban water supply. However, at the local level, it is advisable to integrate these consumption levels into the hydrological planning and basin management.
In this regard, the reuse of reclaimed water, the use of desalinated seawater, and the optimization of cooling and process water treatment systems can minimize the impact on freshwater resources. Even so, it is essential that the government establish clear and consistent criteria for processing permits for water extraction, brine discharge, and the use of recycled water, avoiding bottlenecks and unequal treatment. different hydrographic demarcations.
Demand, infrastructure and value chain
Hydrogen production only makes sense if there is demand to meet. In sectors that already use hydrogen (refining, fertilizers, basic chemicals), the change consists of replacing fossil hydrogen with renewable hydrogen, something relatively straightforward from a process perspective. The challenge lies in agreeing on prices, delivery schedules, and guarantees of origin that justify investments by both producers and consumers, often through [unclear - possibly "through" or "through"]. long-term contracts with risk sharing.
In newer applications as a fuel, the outlook is much more uncertain. Heavy road transport, for example, is torn between investing in high-capacity electric batteries and using hydrogen for certain long-distance routes, where refueling time and payload loss due to battery weight may tip the scales in favor of fuel cells. In aviation and maritime shipping, the consensus leans more towards the use of hydrogen-derived fuels (synthetic kerosene, methanol, ammonia) subject to specific regulations such as ReFuelEU Aviation or FuelEU Maritime, which will gradually drive its adoption.
Furthermore, hydrogen will compete in many cases with other renewable solutions such as biomethane or liquid biofuels, which can utilize existing infrastructure and serve as drop-in substitutes in certain applications. In adapted boilers, furnaces, or engines, using biomethane or renewable diesel may require less investment than converting everything to hydrogen, which has particular physicochemical properties (density, diffusivity, flame, etc.) and can generate technical problems in some processes, such as furnaces in direct contact with glass or ceramics, where risks have been observed. surface damage or changes in product quality.
Another critical element is infrastructure. Traditionally, hydrogen was produced and consumed on-site, without extensive transport networks. The new model favors plants that can be located far from consumption centers to better utilize renewable resources, land availability, access to water, and proximity to ports, while also addressing a demand spread across multiple locations and sectors. This necessitates the development of a logistics chain based on dedicated hydrogen pipelines, blending within existing gas networks, tanker trucks for liquefied or compressed hydrogen, and, for international trade, ships transporting ammonia, methanol, or other fuels. high energy density hydrogen carriers.
The choice of transport mode depends on volume, frequency, and distance. For short distances and small to medium volumes, trucks are usually the preferred option; for large, continuous flows between industrial centers, dedicated pipelines can be unbeatable in terms of unit costs; while for long-distance exports, a combination of large vessels, adapted port terminals, and conversion plants for refined products comes into play. usable hydrogen at destinationIn many cases, logistics costs can rival the cost of production itself, so supply chain engineering will be a key factor for economic viability.
All this logistics also requires a robust support industry: manufacturers of electrolyzers, compressors, valves, cryogenic tanks, tube trailers, membranes, control systems, as well as engineering, construction, and specialized service companies. The global hydrogen business database already reflects more than 1.200 companies active in the value chain, from raw materials and subcomponents to refueling stations and fuel cell systems, with a particular focus on energy and mobility applicationsFor Spain, consolidating a competitive supply chain not only reduces external dependence, but also opens up export opportunities for technology and services linked to renewable hydrogen.
The development of renewable hydrogen is therefore progressing on three pillars: climate ambition, public and private financing, and technological and industrial capacity. Annual hydrogen statistics are beginning to capture this movement: increasing targets in Europe and Spain, hundreds of announced projects, tens of gigawatts of planned electrolysis, a network of aid and programs such as the Innovation Fund, the European Hydrogen Bank, and PERTE ERHA, and an industry organizing itself around hydrogen valleys and large industrial hubs. A large part of these intentions still needs to be translated into operational megawatts, but the direction is clear, and the level of detail in the available data offers an increasingly precise picture of the road ahead in this sector. hydrogen economy under construction.
