Spain’s Green Hydrogen Revolution: Through the Shadows of Past  Missteps

Spain embarks on a green hydrogen revolution, learning from past energy missteps, as the government allocates €1.5 billion to fuel innovation and achieve ambitious targets. 

In a strategic pivot towards sustainable energy, Spain finds itself at the cusp of a green hydrogen revolution, mirroring the fervor of the solar energy boom in the early 2010s. 

Learning from past missteps, the Spanish government is injecting €1.5 billion in EU funds to propel renewable hydrogen initiatives, with the ambition to have it contribute at least 25% to the total hydrogen consumption across industries by 2030. 

However, as green hydrogen startups proliferate, the nation grapples with challenges and opportunities, attempting to balance innovation with the pitfalls of its solar energy legacy.

Learning from the Solar Energy Fiasco

Spain’s dalliance with solar energy in the early 2010s serves as a cautionary tale. Once an innovator, the country became a consumer of foreign technologies after abruptly halting state subsidies in 2013, coupled with the introduction of a controversial “sun tax” that crippled demand. In the wake of this solar energy fiasco, Spain now treads cautiously, determined not to repeat past mistakes in its pursuit of green hydrogen dominance.

The Green Hydrogen Renaissance

Bolstered by a surge in EU funds and a newfound focus on cleantech investments, Spain’s green hydrogen sector is experiencing a renaissance. With €1.5 billion earmarked for renewable hydrogen initiatives, startups are mushrooming across the country. The growing landscape of startups spans the entire hydrogen supply chain, from electrolysis equipment to software, shipping, and storage.

Mónica Aguado from Spain’s National Centre for Renewable Energies notes a significant uptick in hydrogen-related startups, emphasizing Spain’s pivotal role in pilot projects. Notably, Óscar López, a venture capital analyst at Net Zero Tech Ventures, highlights the emergence of promising startups, indicating a shift in Spain’s commitment to green hydrogen.

The Upsides of Green Hydrogen

Despite the 2021 investment boom’s aftermath and subsequent valuation adjustments, hydrogen retains its allure. The Ukraine war prompted European leaders to reassess cleantech investments, with EU funds flowing from Brussels reinforcing this commitment. The European Commission’s recent launch of the European Hydrogen Bank’s auction further catalyzes private investment in the sector.

The swiftness in policymaking, aligned with corporate agendas, is evident. Matteco, a University of Valencia spinoff, plans to invest €15 million in the next two years, backed by Zubi Group. Aleix Marcó, co-founder of SOREN HYDROGEN, notes a strategic shift in Spain’s promotion of green hydrogen, with subsidies proving effective and a palpable surge in momentum.

The Ecosystem and Prominent Projects

Spain’s hydrogen ecosystem exhibits progress, boasting more hydrogen patents than Germany and Italy combined. Large-scale projects led by corporations like Enagás, Iberdrola, BP, and Repsol, along with government-backed initiatives like the Next-Tech fund, foster an environment conducive to innovation. The Instituto de Crédito Oficial’s Next-Tech fund plays a crucial role in de-risking green hydrogen investments for emerging Spanish companies.

However, the ecosystem’s growth is not without challenges. Green hydrogen production remains costlier than fossil fuel-derived hydrogen, with the intermittency of renewable energy posing a hurdle. Yet, investors and experts argue that using green hydrogen in industries like steel and fertilizers offers economic and environmental advantages over fossil fuel alternatives.

Tech Challenges and Innovation

Investors acknowledge the need for technological advancements to address green hydrogen’s cost challenges. Promising technologies like Proton Exchange Membrane (PEM) electrolysers and alkaline electrolysers emerge as commercially viable options. Startups such as Jolt Electrodes, H2Greem, and H2B2 contribute to the innovation landscape, focusing on next-generation electrodes and efficient electrolysers.

Software solutions also play a pivotal role. FlexiDAO, a Barcelona-based startup, raised €6.43 million in a Series A round to develop a blockchain platform tracking green hydrogen transport in real-time. While incremental innovations are prevalent, stakeholders emphasize the importance of avoiding a repeat of the solar energy era, urging Spain to champion its own innovations rather than becoming reliant on foreign technologies.

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Balancing Hydrogen and Electrification

As green hydrogen competes with electrification, particularly in the consumer sector, Spain faces challenges. Electric vehicles gain prominence over hydrogen-powered counterparts, except in heavy transport. Startups like Tecnovelero, aiming to launch a green hydrogen-powered vehicle by 2026, must contend with electric vehicle dominance.

The battle between green hydrogen and electrification extends to consumer preferences, with electric vehicles emerging as the preferred choice across most categories. While green hydrogen-powered transport projects, such as the hydrogen-powered train tested in Canfranc, present milestones, consumer preferences may shape the trajectory of adoption.

Major Projects and Regional Initiatives

Mallorca, an idyllic Mediterranean island, aspires to become Europe’s first fully functioning hydrogen ecosystem through the Green Hysland project. Funded by the EU’s Horizon 2020 R&D program, the project aims to produce green hydrogen from solar energy, reducing CO2 emissions by up to 21,000 tonnes annually. If successful, Green Hysland could provide a blueprint for the decarbonization of other islands.

Enagás spearheads the H2Med corridor, a multibillion-euro hydrogen pipeline connecting the Iberian Peninsula to France and Central Europe, funded by the Commission. These large-scale initiatives create opportunities for startups involved in production, transport, and software development. While the sector is expected to take around ten years to mature, Spain aims to position itself as a European leader in green hydrogen.

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