BP and Iberdrola will move to construct a 25-MW green hydrogen project at BP’s Castellon refinery in Spain after taking a final investment decision (FID) in July, the companies said Sept. 12.

The start of operations is expected in the second half of 2026, producing 2,800 metric tons per year of renewable hydrogen, marking BP’s first hydrogen FID.

“BP’s first investment decision for an industrial scale project is an important step forward for our hydrogen business,” said Felipe Arbelaez, senior vice president/hydrogen and CCS at BP.

The green hydrogen will partly replace the current use of gray hydrogen, made from natural gas, in refining processes, cutting CO2 emissions by 23,000 metric tons per year, according to BP. The hydrogen will comply with EU requirements under the Renewable Energy Directive for Renewable Fuels of Non-Biological Origin, contributing to BP’s compliance with the EU transport sector goals under RED III.

The electrolyzer will be supplied by Plug Power Inc., made up of five 5-MW modules of proton exchange membrane equipment. The project was awarded €15 million via the EU’s NextGenerationEU fund.

Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis in Spain, backed by renewable power purchase agreements, at €7.58 per kilogram on Sept. 11, down from €8.94 per kilogram on the month.

The assessment reflects one possible pathway for producing EU RED III-compliant green hydrogen.

BP narrows hydrogen focus

BP has narrowed its focus on green hydrogen projects in Europe to develop between five and 10 plants by 2030, even as it lines up FIDs for electrolyzers in Spain and Germany.

The company was previously chasing 30 different green hydrogen plant opportunities, but now it is “focusing hydrogen down,” CEO Murray Auchincloss said in a results call on July 30. “We’re now thinking about what we can actually construct and get going,” Auchincloss said.

The other project the company plans to develop is its wholly owned 100-MW project at its Lingen refinery in Germany, where it aims to reach a positive FID by the end of 2024, he said.

Plug evaluation contract

Separately, Plug Power said Sept. 12 it had secured a technical evaluation contract from Dourogas and CapWatt for another 25-MW PEM electrolysis plant in Portugal as part of a green methanol project.

The contract is part of the front-end engineering design phase of the H2Driven project, which could produce 80,000 metric tons per year of methanol from green hydrogen and synthesis gas from biomass gasification, for use in heavy industry and mobility, with operations starting by the end of 2026.

The technical evaluation will aid the permit and funding application and plant development phase ahead of FID.

Source: Chemical Week by S&P Global