Green Hydrogen Becomes Key to Spain’s Ambitious Decarbonisation Amid Structural and Regulatory Challenges

New analysis predicts that Spain’s ambitious green hydrogen targets will face infrastructure and regulatory hurdles as electricity demand surges, and sets an electrolyser capacity of 2.5 GW by 2030.

MADRID (AURORA ENERGY RESEARCH)— According to the global energy market analytics provider Aurora Energy Research, electricity demand in Spain is expected to increase by 19% between 2024 and 2030, driven mainly by electrification, industrialisation, and the rise in green hydrogen production. By 2030, electricity demand in Spain will reach 294 TWh, a nearly 50 TWh increase from 2024, with almost 8% of this growth coming from green hydrogen production.

The National Energy and Climate Plan (PNIEC in Spanish), approved by the Council of Ministers on 26th September, sets targets of up to 12 GW of electrolyser capacity by 2030. These targets are among the most ambitious in Europe, surpassing even Germany and the UK with 10 GW. In certain industries, buyers’ willingness to pay for hydrogen has exceeded expectations, particularly where EU mandates are expected to require hydrogen users to utilise a certain percentage of green hydrogen compared to grey hydrogen, in line with new requirements published in early September for RFNBO production. Introducing mandates for renewable hydrogen use into national legislation, as has occurred in Germany, and providing clear guidance on penalties for non-compliance with these targets could further drive demand for green hydrogen and increase buyers’ willingness to pay a premium over grey hydrogen prices.

Decarbonisation: The role of hydrogen in Spain’s energy market

Green hydrogen could be key to decarbonising critical sectors such as transport and industry. Spain has already made commitments through its Hydrogen Roadmap, approved in 2020, to ensure the green hydrogen value chain develops in the coming years. However, a more conservative view should be taken regarding the targets set in the NECP, predicting that challenges in infrastructure, costs, and technological adoption could delay meeting the proposed goals, especially regarding electrolyser capacity for hydrogen production. In Spain, electrolyser capacity could reach 2.5 GW by 2030, Aurora Energy Research assesses. By that time, Aurora forecasts a hydrogen price of 4.7 €/kg in the Iberian Peninsula, falling to 2.5 €/kg by 2050.

According to Emma Woodward, European Hydrogen Market Lead at Aurora Energy Research, most European countries have set highly ambitious targets that will be challenging to meet, especially as many have seen project cancellations. Nevertheless, the Spanish government’s continued commitment can be seen as a positive signal for developers.

This week, in response to the Spanish government’s announcement to make the tax on energy companies permanent, Repsol has announced the suspension of three projects with an electrolytic capacity of 350 MW. Although Spain’s decarbonisation targets are ambitious, green hydrogen will play a vital role in meeting the EU’s goal of climate neutrality by 2050. However, structural, technological, and regulatory challenges must be overcome for hydrogen to become a decisive factor in the region’s energy transition.

Javier Pamos Serrano, Product Manager at Aurora Energy Research, comments:

“Despite being one of the most competitive regions for green hydrogen production, its development in the Iberian Peninsula is lagging due to a lack of infrastructure, high costs, and the need for technological adaptation to enable its use.”

Media Contact:

Gonzalo Montes, Press Officer
+34 682 414 582
Gonzalo.montes@auroraer.com

ABOUT AURORA ENERGY RESEARCH

Established in 2013, Aurora Energy Research is a leading global provider of power market forecasting and analytics for critical investment and financing decisions. Headquartered in Oxford, we operate out of 14 offices worldwide covering Europe, North & South America, Asia, and Australia.

Our comprehensive services include market outlook packages for energy industry participants, advisory support, and innovative software solutions. We foster diversity with a team of over 600 experts with backgrounds in energy, finance, and consulting, offering unparalleled expertise across power, renewables, storage, hydrogen, carbon, and fossil commodities. Our mission is to facilitate the global energy transition through widely trusted quantitative analysis and high-quality decision support.

 

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