Spain’s energy tax threatens EU green hydrogen plans, industry warns – EURACTIV.com

As energy prices skyrocket across Europe, the chairman of electricity giant Iberdrola has warned of short-sighted measures in Spain that threaten the expansion of renewable electricity needed to the production of green hydrogen.

Europe’s path to net zero emissions by 2050 will require large amounts of renewable electricity, including for the production of so-called green hydrogen from the electrolysis of water.

Policy makers are considering hydrogen to store energy and as a feedstock to decarbonize carbon-intensive industries like chemicals, steel and heavy transport.

But investments in green hydrogen are now on hold in Spain due to a one-off tax imposed by the government in response to rising electricity prices, said Jose Galán, chairman of Spanish electricity company Iberdrola. .

Madrid announced on September 14 its intention to recover 3 billion euros from electricity companies, accused of deriving windfall profits from soaring gas prices.

“Some countries imposing new royalties on renewable energies due to the temporary situation of gas prices seriously worry investors and endanger future investments in renewable energies,” Galán warned.

Europe is already behind on the deployment of renewables and regulatory certainty is crucial to attracting investment, Galán said at the Renewable Hydrogen Summit on September 29.

Others in the industry have accepted. Europe needs a lot more renewable electricity to develop the green hydrogen market, said Walburga Hemetsberger, CEO of SolarPower Europe, a trade association. And that requires more investment and faster approval procedures for new wind and solar projects, she added.

“Green hydrogen… will need huge volumes of green electricity,” said Sopna Sury, CEO of the hydrogen unit at RWE, the German energy company.

The race is on for hydrogen market leadership

The comments came after the September publication of a study describing the potential of solar energy in building a hydrogen economy. The study looked at locations around the world and singled out the southernmost Spanish city of Malaga which has the highest potential in Europe.

But these investments are now suspended in Spain due to the exceptional tax imposed on electricity companies. Iberdrola has reportedly suspended tenders for goods and services associated with the construction of renewable energy projects in Spain in order to assess their economic viability.

Due to the current energy crisis, BloombergNEF has reduced its solar PV projections for next year by 1.5 GW, according to Vesa Ahoniemi, head of strategy for the Finnish electricity company Fortum.

This despite the widespread recognition that Spain has a key role to play in the deployment of solar photovoltaic energy and green hydrogen.

“The development of renewable energies is essential for the decarbonization of Europe, and Spain is crucial as an important site for solar photovoltaic installations,” said Jan Rosenow, European director of the Regulatory Assistance Project, a think tank .

Any delay in the deployment of renewable energies will jeopardize Europe’s goal of reducing emissions and being a world leader in green hydrogen.

“We have to be quick,” warned Iberdrola’s Galán, saying the United States was aiming for very competitive hydrogen prices. $ 1 / kg by 2030.

European hydrogen has a fighting chance, he added, saying the EU has competitive advantages such as binding targets and companies willing to invest.

According to the study, renewable hydrogen could become as cheap as 0.7 € / kg ($ 0.8) if produced from photovoltaic solar panels in Malaga.

Renewable hydrogen is currently four times more expensive than hydrogen produced from fossil gas. This means that Europe’s goal of installing 40 gigawatts of electrolysers by 2030 will only be achievable if the policy framework is right, said Galán, calling for further investment and tax cuts. to promote renewable energies.

At the same time, rising gas prices mean that the cost of producing hydrogen from electrolysis is becoming relatively more competitive. “Rising gas prices have a significant impact on the cost of hydrogen made from gas,” Rosenow told EURACTIV.

[Edited by Frédéric Simon]