Europe’s largest plant goes into operation in Spain

But its production is difficult, so far there has not been a single project for industrial use on a large scale in Europe. However, this is precisely what is decisive for the development of the new market. Both Iberdrola and the Spanish government now want to play a leading role in this.

The strategy behind it: Spain should not only become independent of energy imports and fossil fuels. It also wants to export green hydrogen to the rest of Europe – and that profitably for Iberdrola.

>> Also read here: Energy hope Liquefied natural gas: This is how a floating LNG terminal works

In Puertollano, the group is therefore investing 150 million euros in a first step to produce 3,000 tons of green hydrogen per year and thus avoid 48,000 tons of CO2 emissions – about as much as around 22,000 German households emit in a year.

Anyone who approaches the new facility will see the freshly white and green whitewashed Iberdrola production hall from afar, which stands in stark contrast to the aging Fertiberia facility behind it.

Spain’s largest fertilizer company has been producing artificial fertilizer here for over 60 years, the most important ingredient of which is ammonia. The energy for this has so far been supplied by gray hydrogen, which is produced from natural gas.

But Fertiberia wants to become climate-neutral by 2035 – and is therefore gradually converting its energy supply to green hydrogen. The demand is huge: Even the installed capacity of 20 gigawatts only covers ten percent of Fertiberia’s energy requirements. It is just the beginning: by 2027, it is expected to increase more than tenfold to 40,000 tons of green hydrogen per year. Iberdrola is investing 1.8 billion euros for this.

A photovoltaic system provides the required electricity

The plant, which international groups of experts visited during the construction phase, draws its electricity for the electrolyser from a photovoltaic plant a few kilometers away, which has an installed capacity of 100 megawatts. An underground cable brings the electricity directly to the production hall.

There, thick, black power cables run into a total of 16 square electrolysers, each of which is around one cubic meter in size. They consist of 200 layers of a membrane through which water flows and which uses solar power to separate hydrogen and oxygen.

Each of these 16 electrolysers has a capacity of 1.25 megawatts, which together create the 20 megawatts that make the Puertollano plant the largest in Europe.

The hydrogen is fed from the electrolysers into eleven storage tanks that are a few meters from the production building and tower 23.5 meters into the sky like oversized white columns.

Since hydrogen is quite voluminous, it is compressed at 60 bar, which means that twice as much fits into each storage tank – a total of 6000 kilograms of hydrogen in the eleven tanks. That’s enough to cover Fertiberia’s needs for two days.

Since solar energy is not always available in the same amount, Iberdrola has chosen the intermediate step via the tank farm to ensure a constant energy supply for Fertiberia. The construction of the plant took just 1.5 years. Competitors also tip their hats to the speed.

The operation is unmanned

Not a single person will work in the plant. In any case, the production hall may only be entered when the electrolysers are not in operation. A gust of wind could be enough to severely disrupt the production of the volatile gas. In addition to fire alarms, there are also sensors on the ceiling of the hall that measure the temperature and concentration of the hydrogen.

If the latter exceeds its setpoint, exhaust air pipes are opened so that the hydrogen can escape. However, the team for this is located 400 kilometers away in Castellón on the Mediterranean coast. Only for the first two years does someone stay close by in Puertollano to be on the safe side.

>>Read also here: Plug Power boss: “Green hydrogen can already be competitive”

As in Puertollano, Iberdrola initially wants to use green hydrogen where it can displace gray hydrogen. This applies above all to refineries and fertilizer manufacturers. The reason: “In order for us to invest, demand must be secured,” says Millán García-Tola, who is responsible for green hydrogen at Iberdrola, in an interview with the Handelsblatt.

In a second step, Iberdrola wants to replace fossil fuels with green hydrogen in production processes that require high temperatures, such as steel or ceramics production.

To this end, Iberdrola has entered into a partnership with the Swedish company H2 Green Steel. With investments of 2.3 billion euros, green hydrogen with a capacity of one gigawatt is to be produced near a steelworks in order to produce two million tons of almost emission-free steel per year. A facility on the Iberian Peninsula is being selected for this, but it is not yet clear which one.

So far Iberdrola has not received any subsidies

“The problem is usually the cost,” says García-Tola. Due to the sharp rise in gas prices, green hydrogen is now competitive with gray. “But if gas prices drop back to the level they were two years ago, it will be around twice as expensive as natural gas and three times as expensive as coal.” That is why subsidies are necessary, at least in the initial phase.

However, Iberdrola has not yet seen any money from the Spanish government for the Puertollano plant. It has promised investments of 1.5 billion euros in green hydrogen in the years 2021 to 2023 from the European recovery fund. But she has only started tenders for small projects – worth just 400 million euros, according to the industry.

“We built anyway,” says García-Tola. “If we hadn’t moved, nobody would have taken a step forward.”

But that is important because today there are neither large-scale factories for green hydrogen nor manufacturers of correspondingly powerful electrolysers. Iberdrola is counting on the company subsequently receiving aid from the EU fund.

The government wants to make green hydrogen an export hit

The Spanish government wants to boost the production of green hydrogen and install a capacity of four gigawatts of electrolysers by 2030. That is a tenth of the 40 gigawatts that the EU has set as a target. García-Tola considers both values ​​to be very ambitious. “Half of the period has already passed,” he says.

Spain’s goal of exporting green hydrogen can at best be achieved in the medium term. “We assume that green hydrogen can only be used outside of local markets from 2030 or 2035,” says Bruno Esgalhado, partner at the management consultancy McKinsey in Madrid.

First of all, the market has to develop and the necessary infrastructure has to be built to transport hydrogen over long distances. “Investors are in the starting blocks, but they are still reluctant to invest in a market that they don’t yet know how it will develop,” says Esgalhado.

In the long term, he is optimistic about Spain’s role as an exporter. An abundance of sun and wind meant that it could be cheaper for a buyer like Germany to import clean energy from Spain than to produce it itself.

Iberdrola manager García-Tola is more skeptical: “The energy costs for producing green hydrogen are around three euros per kilogram of hydrogen in Spain, in Germany they are perhaps 20 to 30 percent more expensive – that’s not a big difference,” he says . Added to this would be the transport costs.

But it is also clear that Germany, with its extensive industry, will not be able to cover demand with its own production alone. The federal government therefore welcomes the Spanish plans to build a new pipeline to France in order to transport gas and later also green hydrogen to Northern Europe. So far, however, such an infrastructure has been lacking.

More: How Spain wants to become the superpower for green hydrogen.