Spain Edges Forward With Framework Rules for Green Hydrogen Hub

(Bloomberg) -- Spain took a further step toward becoming a clean energy hub after its regulator reassured potential investors of a level playing field in renewable power and green hydrogen, according to Enagas SA.

Last week, the country’s antitrust regulator recommended that Enagas keep its green hydrogen interests separate from its gas transport business. While the watchdog’s intervention won’t immediately transform the investment environment, it shows Spain is starting to develop a regulatory framework for its nascent hydrogen industry, said Enagas Chief Executive Officer Arturo Gonzalo.

“This is the difference with other European countries where the regulatory situation is less clear,” Gonzalo said in an interview. “If Spain does this well, it can become a great hydrogen exporter and attract industries that need renewable hydrogen.” 

The European Union has made green hydrogen -- produced using renewable power -- an essential part of its strategy to fight climate change and achieve net-zero emissions by the middle of the century. While the fuel could eventually replace hydrocarbons in energy-intensive industries like fertilizers, steel or cement, the production of green hydrogen currently isn’t viable without government support.

Spain is supporting efforts by companies to set up pilot plants in the country. 

“Spain has the land, the resource, the industrial value chain and the large consumers that will support demand in this first phase,” Gonzalo said. 

Hydrogen project announcements in Spain are more than triple the 4 gigawatts the government is targeting by 2030, according to BloombergNEF. High solar radiation across the country, regions with strong and stable winds and large swaths of land with low population density also mean Spain has huge potential for renewable power.

Still, the nascent green-energy hub faces significant challenges, said Adithya Bhashyam, an analyst for European hydrogen at BNEF. The “biggest bottleneck” will be permitting for renewable projects, Bhashyam said, adding that delays in public funding have held up operations at Europe’s largest green hydrogen plant -- a 20-megawatt project by power company Iberdrola SA and fertilizer maker Fertiberia SA. 

The obstacles in terms of transporting hydrogen should eventually be overcome by gas pipelines connecting Spain to France and Italy, said Enagas’s Gonzalo. While the MidCat link to France was abandoned in 2019, with French President Emmanuel Macron repeatedly dismissing the project, the CEO is undeterred.  

“No one in Europe today doubts this infrastructure needs to be built,” said Gonzalo, adding that opposition to MidCat is down to internal politics. “I am convinced it will be built.” 

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