One of the developers awarded subsidies under the pilot European Hydrogen Bank auction in April has withdrawn from the process, but the six remaining winners today signed their respective grant agreements, the European Commission's Directorate-General for Climate Action has announced.
The €720m ($791m) total awarded on 30 April has now been reduced to €694m after Spanish solar developer Benbros Energy decided not to move forward with its 60MW El Alamillo H2 project in Spain.
Few details ever emerged about the project, which had been awarded a subsidy of €0.38/kg to produce about 65,000 tonnes of green hydrogen a year — for instance, no offtakers were named and it was not clear how the H2 would be used. Hydrogen Insight has approached Benbros for comment.
The six remaining winners signed their grant agreements earlier today, and are still on course to receive between €0.37 and €0.48 per kilogram of green hydrogen produced in their first ten years of operation — although none of them have yet taken a final investment decision.
The €694m of funding — which will come from the European Commission’s Innovation Fund — is supposed to help bridge the gap between the price of green hydrogen and grey H2 made from unabated fossil fuels.
But with an expected cost gap of around €7/kg, the offtakers must be willing to pay a premium for the cleaner version of the gas.
The projects that now have grant agreements are as follows:
1) Project Catalina, Spain (500MW)
The joint-largest project to sign grant agreements is the first 500MW phase of the Catalina green hydrogen and ammonia facility, located near the town of Andorra — not be confused with the nearby microstate of the same name — in northeastern Spain.
It will receive €0.48/kg in subsidies over ten years, and is due to receive just under €230.5m in its first ten years of operation.
First announced in February 2022 by the Renato PtX consortium — comprising gas transmission system operator Enagás, power and gas utility Naturgy, fertiliser producer Fertiberia and Danish fund manager and developer Copenhagen Infrastructure Partners (CIP) — the first €2.63bn phase envisages production of 84,000 tonnes of green hydrogen and 247,000 tonnes of renewable ammonia a year.
As well as 504MW of dedicated onshore wind power and 571MW of solar, Catalina also comprises a 300-tonne hydrogen storage facility and a 221km H2 pipeline to a Fertiberia fertiliser plans in the port of Sagunto.
The grant agreement was signed despite the estimated cost of building the project being increased by €285m in August.
Most of the plant’s ammonia output is earmarked for fertiliser production at a new facility owned by consortium partner Fertiberia in the port of Sagunto. Hydrogen produced at Catalina will also be injected into the local gas grid.
The partners have previously said they will begin construction of the 500MW phase by the end of next year, with entry into operation by December 2027.
Like all major ammonia producers, Fertiberia is faced with a mandate to source 42% of all its hydrogen from renewable sources by 2030 under the Renewable Energy Directive III (RED III), meaning it is probably prepared to pay a considerable green premium for renewable hydrogen.
This, combined with the project’s relatively large scale, is likely why Catalina was able to undercut other projects in the European Hydrogen Bank’s subsidy auctions, eventually walking away with a ten-year production contract for €0.48/kg.
CIP and its co-developers want to eventually scale the plant up to 2GW of electrolysis capacity, although no timeframe has yet been given for this.
2) MP2X, Portugal (500MW)
The first €1bn, 500MW phase of the MP2X green hydrogen and ammonia project — named after its development consortium MadoquaPower2X — will produce approximately 50,000 tonnes of green hydrogen per year, to be injected into the local gas grid, as well as 300,000 tonnes of green ammonia for use in maritime transport and fertiliser production.
Located in the port of Sines in Portugal, MP2X was first announced in April 2022 by Portuguese developer Madoqua Renewables, Dutch consultancy Power2X and the aforementioned CIP.
Power for the project will come from approximately 1.1GW of dedicated wind and solar capacity procured from a nearby “renewables community”.
Phase 2 would see the project enlarged to 1.2GW of electrolyser capacity, producing 150,000 tonnes of green hydrogen and over one million tonnes of renewable ammonia a year.
The partners — now in line for a subsidy of €0.48/kg totalling €245m over ten years — originally intended to have the project built in 2025 but this timeline now looks unlikely.
“The grants are bringing [MP2X and Catalina] closer to Financial Investment Decision [sic] by reducing the gap between cost price and sales price and are important enablers for the success of the projects,” said CIP at the time of the award announcement. “The grant is dependent on the two projects being operational within five years of signing the grant agreement. CIP expects the two projects to be operational no later than 2029.”
3) Grey2Green II, Portugal (200MW)
Few details are available about this 200MW project, which has been granted €0.39 for each kg of hydrogen produced — totalling €84.2m.
Developer Petrogal is the refining subsidiary of Portuguese energy giant Galp, and also has responsibility for its hydrogen business.
Last year, Galp took FID on a 100MW proton exchange membrane (PEM) electrolysis project at its refinery in Sines, Portugal’s largest consumer of grey hydrogen produced from fossil gas.
Like other EU industrial hydrogen consumers, Galp is expected to source at least 42% of its H2 for refining from renewable sources by 2030, but the 100MW project is only expected to displace 20% of its grey H2 demand.
4) SkiGA, Norway (117MW)
The Skipavika Green Ammonia (SkiGA) project is being developed by little-known Norwegian developer Fuella, which was formed in 2020. The project’s website indicates that the scheme will entail a 130MW electrolyser making 100,000 tonnes of green ammonia per year, however the winning bid — of €0.48/kg of green H2 , totalling €81.3m — is only for 117MW of electrolyser capacity.
SkiGA is located near Mongstad, a major oil & gas production hub close to Bergen, Norway, and aims to supply green ammonia to replace fossil-based NH3.
Last year, German utility EnBW became a 10% minority stakeholder in the project, as part of a deal to exclusively offtake ammonia volumes from SkiGA. Electricity for the project will be provided by wind and hydropower.
Construction at the project site has already begun — with an expected capex cost of NKr4bn ($361m) — despite the developer not announcing a final investment decision. Operation is due to begin into 2026.
With a capex cost of NKr4bn ($361m), construction on SkiGA is expected to begin this year, entering into operation in 2026.
Fuella, which is also developing a second 260MW green hydrogen and ammonia project in Norway, is backed by €20m of funding from German institutional investor Allianz Partners, a minority stakeholder in the company.
5) E-NRG Lahti, Finland (90MW)
Finnish developer Nordic Ren-Gas, founded in 2021, plans to build a 90MW green hydrogen electrolyser at a new integrated hydrogen, synthetic methane and district heating plant in Lahti, southern Finland, and was successful in the EHB with the lowest bid of all — €0.37/kg, amounting to a €45m subsidy over ten years.
The estimated 12,000 tonnes per year of green hydrogen production from the plant, being developed in conjunction with Finnish utility Lahti Energia, will be used in heavy transport and in e-methane production.
In March, the company agreed a €230m framework loan agreement with the EU's lending arm, the European Investment Bank, to help support the development of its 550MW portfolio, which would generate 150,000 tonnes of e-methane a year, as well as 2TWh of renewable heat for local utilities.
While Lahti Energia is likely to use the renewable heat generated by the Lahti project, it is not clear if the utility will be making use of the e-methane or H2 fuel, and no other offtakers from the projects have been publicly identified.
First hydrogen and e-methane production is expected in 2027.
6) Hysencia, Spain (35MW)
Project developer Angus — which appears to be a pseudonym for Spanish hydrogen company DH2 Energy — is set to receive €0.39/kg for the 35MW Hysencia project in Spain, producing around 17,000 tonnes over ten years and receiving subsidies of €8.1m from the European Hydrogen Bank.
Hysencia, located in Aragon, northeast Spain, envisages using 49MW of solar capacity to power the 35MW electrolyser, with construction mooted to begin this year.
DH2 Energy is the hydrogen division of a company run by solar developers Olivier Crambade and Philippe Esposito, who in 2021 sold the Spanish and French units of their solar business Dhamma Energy to a subsidiary of Italian oil & gas firm Eni.
