BP, Iberdrola invest in 25-MW green hydrogen project in Spain

Oil and gas major BP Plc (LON:BP) and Spanish utility Iberdrola SA (BME:IBE) on Thursday unveiled a 25-MW green hydrogen project, set at BP’s Castellon refinery in Spain’s Valencia region.

Their 50/50 joint venture (JV) had already taken the final investment decision on the development, which BP discreetly announced recently.

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The project previously received EUR 15 million (USD 16.6m) in funding from the EU’s NextGeneration instrument channeled by the Spanish government through its incentives programmes targeting innovations in the green hydrogen sector. Apart from the JV, Castellon Green Hydrogen SL, Valencia-based non-profit technology centre ITE is also involved.

The project will involve the installation of five 5-MW containerised proton exchange membrane (PEM) electrolysers supplied by Plug Power Inc (NASDAQ:PLUG). The renewable energy for the setup will be provided by Iberdrola.

The utility secured a power purchase agreement (PPA) to supply 200 GWh of electricity annually from its solar plants and wind farms, Thursday’s announcement said.

The new plant is expected to be able to produce 2,800 tonnes of green hydrogen per year, which could replace part of the grey hydrogen that BP’s refinergy in Castellon currently uses. The switch from grey to green will enable the refinery to avoid the emission of some 23,000 tonnes of carbon dioxide per year.

Production at the plant is expected to begin in 2026.

The 25 MW is the initial phase of BP’s plans for green hydrogen in the Valencia region. The company is looking into opportunities to increase capacity in the coming years. In the future, the green hydrogen produced could be used in the region's industries such as ceramics, chemicals, and heavy transport.

“bp's first investment decision in an industrial-scale project is an important step forward for our hydrogen business. We are focused on value, moving forward only on the best projects in our portfolio that can create additional value through integration and fully meet our investment objectives,” stated Felipe Arbelaez, Senior Vice President of Hydrogen and Carbon Capture and Storage at BP.

“Projects such as the one in Castellón demonstrate that, with the collaboration of all the players in the sector and the right incentives, it is possible to develop a new industrial model based on the green hydrogen value chain,” added Mario Ruiz-Tagle, CEO of Iberdrola Spain.

(EUR 1.0 = USD 1.104)