European funds fan the flame of green hydrogen in Spain

Although this ‘green’ fuel promises to be a fundamental piece in the energy transition, decisions (especially financing) in this regard should be taken with the greatest possible caution.

It seems that hydrogen has come to the energy transition to stay. A large part of that responsibility will fall on a part of the European recovery funds that will be used to innovate, develop and strengthen this new technology in our country. This is one of the main premises of the PERTE of renewable energies, renewable hydrogen and storage approved on December 15 by the Government of Spain, with a clear vision of the future.

The objectives to work on are already outlined in the Green Hydrogen Roadmap. The document aims for Spain to lead the research of this new energy vector, fundamental to decarbonize both heavy transport by land, sea and air, as well as large industry with high energy consumption (currently using fossil gas). With a target of 4 GW of installed capacity of electrolyzers or that a minimum of 25% of what the industry consumes comes from renewable sources in 2030, it is intended to reach a relevance in this nascent and pioneering market to be a reference in Europe.

Start-up funds

Now component 9 of the PERTE of energy aims to be the accelerator pedal thanks to the € 1,555 M that will be allocated to everything related to hydrogen, green and renewable, of course. To this end, the document identifies different lines of action with several phases. The first is to enhance and boost the industrial value chain of hydrogen with the support of the creation of technical capacities and technological advancement, especially with respect to R + D + i, with demonstrations and prototypes.

“It is necessary to control and avoid the injection of hydrogen into the gas network because it would mean a greenwashing of fossil gas”

Subsequently, it is intended to promote the actions of technology centers and companies that today have lines of work on renewable hydrogen, stimulating testing facilities for systems, components or equipment. Among the extensive list of new applications, there would be the production of hydrogen through hydrolysis, the fuel cell and direct combustion systems, as well as the subsidy to new land vehicles of heavy goods and maritime vessels, among others.

Another line of work is to turn Spain into a “Hydrogen Hub”, an avant-garde valley and a reference at European level. It would be developed around large energy consumption centers to identify and solve the current barriers to promote the deployment of high-capacity electrolyzers, integrate renewable hydrogen supplies, training programs and ensure that all the electricity of the “hub” comes from renewables through bilateral energy contracts (PPAs). In many cases, and with the defined characteristics, what is tried is to capture pioneering projects that are susceptible to access financing through European funds.

A tortuous road

The imminent call for projects remains that, imminent; it doesn’t come. Approved Order 1444/2021 on December 24, endowed with € 250 M for the promotion of the value chain, and Order TED/1445/2021 of the regulatory bases for the granting of aid, with € 150 M, companies can not yet submit the projects because the IDAE has not taken out the call. Although they will not be the last calls, the delays will mark the pace of progress.

All Spanish companies are waiting to boost this energy vector in Spain. Small SMEs, startups, investment funds, technology and large electricity, gas and oil companies seek to enter this new market thanks to European money and thus redirect their development plans.

Problems: efficiency and fossil gas

However, currently hydrogen is not an inexhaustible vein of gold, it has limitations and among them the promotion by companies that, until now, have had fossil fuels their main historical value. An excessive oversupply of hydrogen projects can distort and redirect funds away from other technologies that are already mature, competitive, more sustainable and with a higher social value.

The downside is efficiency. Currently, to produce 1 kg of hydrogen we need 50 kWh of electricity from sources such as the sun or wind, if we want it to be green, with a process efficiency between 60% and 70%. As the report of the Renewables Foundation “The role of hydrogen in the energy transition” points out, one of the main values is to bet on the maximum energy efficiency of the processes, so if we have sectors with an electrical alternative, such as the railway, developing hydrogen systems could only mortgage us.

Another point highlighted in the report is that of electrofuels in mobility. Because of its low efficiency (below 20%), it should be considered a last resort option for energy losses throughout its transformation process. Likewise, they are consumed in thermal engines, with much lower efficiency than current vehicle electric engines, and by requiring carbon for their synthesis, they emit carbon dioxide.

Together, it is necessary to control and avoid the injection of hydrogen into the gas network (blending), because it would mean a greenwashing that would continue to promote fossil gas and invest in transport infrastructures that have nothing or little to do with current demand and the search for sustainability. Therefore, it is important to show that hydrogen is fundamental, but only in sectors that are not susceptible to direct electrification. We will miss a historic opportunity if we do not play the deck of European funds taking into account their limitations.

Source: The Confidential