Spain has made a historical intervention in the European renewable energy sector in a manner that is radically setting the trends in the right perspective and pattern. The Ministry for the Ecological Transition and the Demographic Challenge, MITECO, made the first “auction-as-a-service” call in the country, awarding €126.4 million to two “pioneering” projects in the production of hydrogen through renewable sources to replace fossil fuel derivatives and alternatives in the fuel sector.
The first-ever auction in the country marks a turning point in the way
The first auction-as-a-service mechanism in Spain marks the beginning of a “revolutionary way” to fund renewable hydrogen projects, according to the country’s government. The Ministry for the Ecological Transition and the Demographic Challenge awarded a total of €126.4 million to two projects in the Valencia region and Castile and León combined. The two projects feature a total of 160 MW of electrolysis capacity and had been shortlisted by the European Climate, Infrastructure, and Environment Executive Agency (CINEA) previously.
The Spanish AaaS made it possible for the country to fund projects that ranked well in a European Commission evaluation but lacked enough budget to be supported by the European Union. The funds are administered by the Institute for Energy Diversification and Saving and are sourced through the Recovery, Transformation, and Resilience Plan in Spain, known as the PRTR, and administered through an organization named MITECO.
Production-based subsidies replace traditional capital expenditure support
The incentives involve subsidies based on the quantity of hydrogen produced and labeled as fully renewable, categorized as RFNBO (Renewable Fuels of Non-Biological Origin) within the EU Renewable Energy Directive. The incentives will be awarded for a maximum period of ten years from the point of operation to projects that satisfy the “do no significant harm” criteria in the entire lifecycle assessment.
The Orange.Bat project has the biggest allocation in the ceramic sector
The biggest-funded project is Orange.Bat, which has been awarded a budget of €82.5 million to construct an electrolytic renewable hydrogen plant in Onda, in the Castellón Province. The project involves a 100 MW alkaline electrolyser with an estimated annual production capacity of 11,960 tonnes of hydrogen. The electricity will be derived from a combination of wind and photovoltaic platforms, and the hydrogen will be sold to 11 ceramic industries in the Valencia region.
The second project is eM Numancia and involved an investment of €43.9m in creating an electrolytic hydrogen production plant in Garray, in the province of Soria. The project will provide five industrial enterprises in the chemical, wood, logistics, and maritime industries with green methanol. The plants involve a 60 MW alkaline electrolyser fueled by wind and solar parks and are expected to produce 6,363 tonnes of hydrogen and 33,334 tonnes of green methanol per annum.
The country’s commitment to a low-carbon economy
The national auction is a part of Spain’s wider policy to make renewable hydrogen an important actor in the decarbonization of energy-intensive sectors and the transport sector, where electricity-based solutions do not make economic sense. The auction aligns with the strategic framework of the PERTE for Renewable Energies, Renewable Hydrogen and Energy Storage (ERHA).
Key project details:
- Orange.Bat: 100 MW electrolyser, 11,960 tonnes/year
- eM Numancia: 60 MW electrolyser, 6,363 tonnes/year
- Combined capacity: 160 MW electrolysis
- Total funding: €126.4 million
The “auction-as-a-service” innovation in Spain shows the way to finance the production of renewable hydrogen. By supporting projects that didn’t receive any funds from the EU because of financial constraints, the project promotes the continuous implementation of hydrogen projects in the country. The fact that the project will be based on production subsidies instead of investment subsidies marks a major turning point in innovative incentives, making Spain a frontrunner in sustainable energy transitions and the decarbonization of the European industry.
