Updated: Nov 3
The roles of renewable energy and storage technologies, in helping the world to combat climate change, are key themes at COP26, the UN's Climate Change Conference, taking place 31 October – 12 November 2021.
Green hydrogen especially will be on the agenda. Not least for the opportunities it provides to clean up polluting industries such as ground transport, shipping and aviation.
"Renewable hydrogen, also referred to as green hydrogen, is produced by splitting water into hydrogen and oxygen, using renewable electricity. The hydrogen is collected and used, while oxygen is released as the by-product, if there's no need for it locally."
This is the preferred definition by Google. Thank you Orsted.com in Denmark!
"With green hydrogen, Spain can be an energy exporter for the first time in its history."
These inspiring words came from Miguel Nogales, Founder at Generation Investment Management, when he participated in the panel "Investing in a Better World" (Oct 2021). During the chat with Beatriz Gonzalez, Founder and Managing partner, Seaya Ventures, he claimed that if companies in Spain can make "green hydrogen with a good renewable resource, then that can be exported to the rest of Europe".
There are caveats though. Nogales did point out that it is both a difficult and capital-intensive endeavor. It is well known that green hydrogen needs more innovation to bring down costs much further.
Along with Germany and Denmark, Spain was one of the founding countries of the International Renewable Energy Agency (IRENA) and has been an active part of the agency since its creation in 2009. According to IRENA, at present, roughly 95% of worldwide hydrogen production comes from fossil fuels.
Clearly, there is a huge opportunity here if Spain can guarantee enough supply of renewable resources and is prepared - with support from the EU - to make necessary capital investments in finding cost-efficient solutions for the storage and delivery of large amounts of renewable hydrogen.
But yes... a lot of money needs to move to make it happen. Ahead of COP26, IEA, The International Energy Agency, issued their World Energy Investment report 2021, saying that:
"Clean energy investment would need to double in the 2020s to maintain temperatures well below a 2°C rise and more than triple in order to keep the door open for a 1.5°C stabilization."
You can find the exact numbers of the billions of Euros needed in the linked report from IEA. However, together with the reallocation of massive funds, I think that Europe, as a continent, also needs one nation to step up and commit to leading this change. Will that be Spain?
Can Spain lead the green hydrogen development in Europe? Many strong leaders, in both the private and public sector, have shown a strong conviction that Spain is indeed ready to accept this challenge.
Spain is also under an enormous pressure to reduce dependency on energy imports, likely to further speed-up the work needed to be done.
As of Nov 1, 2021, Spain has one less source of natural gas due to the closing of the Maghreb-Europe pipeline, responsible for 20% of Spanish natural gas imports. On top of that we have the global shipping crisis. Suffice to say, there is a sense of urgency to take action now.
Led by José Ignacio Sánchez Galán, Iberdrola, the Spanish multinational electric utility company, has presented 53 projects related to green hydrogen to the Next General EU program. This is equivalent to investments of €2.5 billion and an annual production of 60,000 tons.
After an investment of €150 million, Iberdrola, together with Fertiberia, Spain's largest fertilizer manufacturer, is already building - in their words - "Europe’s largest green hydrogen project". At the plant in Puertollano, Ciudad Real, they are decarbonizing the entire industrial, fertilizer manufacturing process.
By 2027, these two companies will have committed to deliver 800 MW of green hydrogen in four phases, at the mentioned plant in Ciudad Real and at a plant in Palos de la Frontera, Huelva. In total, these initiatives are said to represent an investment of €1.8 billion. Local willingness to invest billions of euros in renewable hydrogen? Check.
Can Spain guarantee enough production of renewable resources?
To become an exporting nation of green hydrogen to the rest of Europe, Spain needs to be able to produce enough renewable energy to cope with both national demand and the demands from its neighbors.
To secure enough supply, Spain relies on deep pockets in other European countries. The prospect of making green hydrogen is attracting many European investors to Spain. And they are supporting with additional billions of Euros in investments to boost production.
One of many examples is Statkraft AS, a hydropower company fully owned by the Norwegian state. They are starting construction of four solar parks in Cadiz, in September 2021. The total capacity will be 234 megawatts peak (MWp), and all four solar parks are to be finalized by the fourth quarter of 2022.
Strong interest from European investors, backed by action, to produce renewable energy from Spain? Check.
Use case: Green Hysland, Mallorca
During the EU Sustainable Energy Week 2021 (Oct, 2021), President Ursula von der Leyen emphasized the use of green hydrogen technology to make Europe the first carbon neutral continent. During her speech, she said:
"The Green Hysland project on the island of Mallorca is a great example. It is the first hydrogen valley on a European island. It will generate, distribute and use at least 300 tons of renewable hydrogen every year, produced from solar energy."
"Green hydrogen will fuel a fleet of fuel cell buses and rental vehicles on the island. It will generate heating for commercial and public buildings, and it will supply auxiliary power for ferries and port operations. This is our European Green Deal at work for European citizens."
Five other EU islands (Madeira, Portugal, Tenerife, Spain, The Aran islands, Ireland, a Greek Island and Ameland, the Netherlands) are now developing green hydrogen projects of their own, based on this best-practice example.
A concrete, implemented and executed project in Spain, to be used as a benchmark? Check.
Storage solutions play a key role
The transportation of potentially massive amounts of green hydrogen from Spain, is where the real difficulty comes into the equation. Findings from the EU Commission (June, 2021), give hope that such solutions are at least identified: "One of the options to enable long-distance transport of hydrogen is the repurposing of existing natural gas pipelines. For long-distance transport within the EU, this is the most competitive hydrogen delivery solution, if available." Born 14 years ago, HESStec is an example of a Spanish startup that is revolutionizing energy storage. Eugenio Domínguez Amarillo, CEO Hesstec, has been leading the development of power systems for integration of renewable energy systems since 2005. He has researched and developed the foundation of solutions for storage integration for almost two decades. In an interview with Elewit (Sep 2021), the venture arm of Red Electrica, he says:
"Storage is called to be the “philosopher’s stone” of the electrical system, profoundly transforming the management of electrical networks. It is changing the system’s paradigm and allowing for an energy model that is fully based on renewable energy sources."
On the topic of where he sees the national ecosystem being today, in relation to its industrial stakeholders and his own field, he comments: "Spanish corporates have understood the value of betting on Spanish entrepreneurs, accelerating creation and innovation, generating different models of collaboration; pilots, open innovation or investment in capital." Spanish tech entrepreneurs dedicated to solving the storage challenge? Check.
To sum up, let's recap on the question in the headline: Renewable hydrogen - is this Spain's top export of the future? As I began to write this piece, I honestly did not know the answer, and I am still not completely convinced after many hours of researching the topic.
What I will say though, is that throughout putting this piece together, to give you a notion of what's going on in this field in Spain, there are clear indications that it is a strong possibility.
In the words of Domínguez Amarillo: "We (Spain) have a golden opportunity to create an industry-driven country, based on knowledge, and with the effort of all the involved agents, we will achieve it.
On December 14th 2021, the Spanish Government approved the strategic project of "renewable energies, renewable hydrogen and storage, which will mobilize an investment of more than 16,300 million euros."
In the announcement it is stated that:
"Hydrogen is a key energy vector for a clean, safe and affordable energy future, because it allows decarbonizing sectors where it is complex to introduce sustainable solutions, such as heavy transport, steel, cement, the chemical industry… Spain already has a renewable hydrogen roadmap that establishes, Among others, the target of 4 GW of production capacity in 2030, 10% of the EU total."
"The quantity and quality of renewable resources give Spain a competitive advantage in the incipient development of renewable hydrogen, which will enable it to become an international hub of technology. That is why the Executive considers it one of its priorities – a country project – and it is the element that receives the most support: 1.555 million, which will mobilize another 2.800 million private capital."
On February 15th 2022, Thierry Lepercq, Executive Chairman, HyDeal Ambition posted:
"History was made today. HyDeal Ambition, the world's largest integrated green hydrogen hub, has officially come out with an unprecedented volume commitment of 6.6 million tons over 20 years at fossil-fuel parity, starting in 2025."
"It will help save 4% of Spain's carbon emissions and 5% of its natural gas imports. A massive weapon against the energy and climate crises!"
"It takes the form of a JV, which I chair, between steel giant ArcelorMittal, fertilizer major Grupo Fertiberia, gas TSO Enagás and renewable energy developer DH2 energy. Competitive green hydrogen is ready to replace fossil fuels at scale, NOW!"
This news made it into Forbes, writing:
"30 European energy players have launched a previously confidential integrated value chain project, intended to deliver green hydrogen across Europe at €1.5/kg 1 before 2030."
--> Before you leave, I would love to get your comment on this piece! Read more --> ETS insight: Spain reclaims its former clean-energy dominance in Europe's green transition