bp and Iberdrola announce final investment decision for the largest green hydrogen plant in Spain

bp and Iberdrola España have given the green light to the construction of a 25 MW green hydrogen project at bp's refinery in Castellón, which is expected to be operational in the second half of 2026.

This is the first hydrogen project undertaken jointly by bp and Iberdrola España through Castellón Green Hydrogen S.L., a joint venture equally owned by both companies.

The project was presented at an official event to publicly celebrate the signing of the final investment decision between bp and Iberdrola España in July 2024.

This initiative, with the participation of the Instituto Tecnológico de la Energía (ITE), has obtained funding of 15 million euros from the Innovative Value Chain and Renewable Hydrogen Knowledge support programmes of the Spanish Recovery, Transformation and Resilience Plan, with funds allocated by NextGenerationEU of the European Union.

Felipe Arbeláez, Senior Vice President of Hydrogen and Carbon Capture and Storage at bp, said: ‘bp's first investment decision in an industrial-scale project is an important step forward for our hydrogen business. We are focused on value, advancing only the best projects in our portfolio that can create additional value through integration and fully meet our investment objectives. This also demonstrates the strength of partners combining forces to move towards an emerging energy source that has the potential to play a significant role in the decarbonisation of industry. The Castellón refinery can lead this transformation’.

Millán García-Tola, Global Hydrogen Director at Iberdrola Spain, said that ‘this collaboration with bp and our project is a further step in Iberdrola's firm and real commitment to promote green hydrogen as a key vector for industrial decarbonisation. The plant will convert 200 GWh/year of Iberdrola's renewable energy into green hydrogen, which will contribute to bp's decarbonisation strategy, in a further example of the close collaboration between the two companies, trusted partners who share values such as a commitment to long-term decarbonisation. Iberdrola will apply all the experience from its existing green hydrogen plants to optimise and accelerate the development of this project.’

‘This project marks a milestone in our strategy and reflects the importance of collaboration, both with other companies that share our vision, such as Iberdrola, and in the public-private sphere. In this way, we are not only making progress in the transformation of our infrastructures in Castellón, but we also aim to strengthen the economic fabric and industrial capacity of the entire Valencian Community,’ said Olvido Moraleda, President of bp Energía España.

Mario Ruiz-Tagle, CEO of Iberdrola España, highlighted that this project is ‘another example of our strategic alliance with bp, which unites us to lead the future of renewable hydrogen in the Valencian Community. 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. The green hydrogen economy is emission-free, electrified, attracts investment and creates quality jobs in the region. This is the real energy transition. We continue to work with committed partners to position Spain as a technological benchmark, driving the creation of a green hydrogen industry in Europe’.

The 25 MW electrolyser will be powered by renewable electricity through a power purchase agreement (PPA) signed with Iberdrola Spain, which will supply 200GWh/year from Iberdrola Spain's photovoltaic and wind projects. The electrolyser will include five 5 MW containerised proton exchange membrane (PEM) technology modules, which will be supplied by Plug Power, a leading manufacturer of green hydrogen solutions.

The green hydrogen produced by electrolysis of water powered by renewable electricity will meet European requirements for producing green hydrogen (Renewable Fuels of Non-Biological Origin, RFNBO) and will support the transition of the bp refinery in Castellón to an integrated energy centre.

It is expected that 2,800 tonnes per year of green hydrogen could replace part of the grey hydrogen currently used by the refinery - currently produced from natural gas - and as such is expected to avoid the emission of 23,000 tonnes of CO2 per year, equivalent to the emissions of 5,000 cars over the same period. This plant could create up to 500 new direct jobs during its construction.

In parallel to this initial 25 MW project, bp continues to evaluate opportunities to increase capacity in the coming years. In later phases of the project, the green hydrogen produced could also be used in key industries in the Valencia region that are difficult to decarbonise, such as the ceramics sector, to replace the natural gas used in their processes, in chemical industries and in heavy transport.

The launch of this project has been announced just a few weeks after bp signed a letter of intent with the Valencian government to strengthen the region's position as a leader in the energy transition. The letter has materialised in the creation of a joint working committee that will serve as a platform for dialogue and collaboration between the two parties and will oversee the transformation of the bp refinery in Castellón into an integrated energy hub.

In recent months, Iberdrola España has entered into several long-term partnerships to drive the decarbonisation of the economy:

• Iberdrola Spain and BP launched their joint venture on 1 December 2023 to deploy 11,700 fast charging points in Spain and Portugal by 2030.
• Iberdrola Spain signed in January 2023 with Norges Bank Investment Management a 1,265 MW renewables alliance in Spain, which was extended in January and April this year, bringing the agreement figure to 2,500 MW.
• Iberdrola Spain in December closed a deal with Masdar to co-invest 15 billion, following the successful investment agreement announced in July 2023 to co-invest in the Baltic Eagle offshore wind farm.
• Last September it teamed up with GIC for the expansion of transmission grids in Brazil for €430 million.
• Iberdrola España and MAPFRE have continued to advance in their strategic alliance by incorporating 150 new MW through a joint venture, which already has 450 MW.
• In addition, a few months ago Iberdrola España signed an alliance with Energy Infrastructure Partners to co-invest in the Wikinger offshore wind farm and boost its offshore wind portfolio.