BP and Iberdrola Announce Investment Decision for Spain's Largest Green Hydrogen Plant

BP and Iberdrola have announced their decision to proceed with the construction of a 25 MW green hydrogen project at BP's Castellón refinery, which is slated to become operational in the latter half of 2026. This marks the first hydrogen initiative launched through Castellón Green Hydrogen S.L., a joint venture equally owned by BP and Iberdrola. The formal announcement of the final investment decision was celebrated in July 2024, with the event highlighting the significant commitment of both companies to this project.

The project has received a substantial boost with 15 million euros in funding from the Spanish Recovery, Transformation, and Resilience Plan, specifically through the Innovative Value Chain and Renewable Hydrogen Knowledge call. This funding is part of the European Union's NextGenerationEU initiative. The Technology Institute of Energy (ITE) is also participating in this venture.

Felipe Arbelaez, BP’s Senior Vice President of Hydrogen & CCS, emphasized the importance of this investment, describing it as a pivotal step for BP’s hydrogen business. “This is BP’s first investment decision for an industrial-scale project and represents a significant advancement for our hydrogen operations. We are committed to progressing only those projects that offer substantial value and meet our investment criteria. This project exemplifies how partnerships can drive forward a nascent energy source crucial for decarbonizing industry. The Castellón refinery will play a leading role in this transformation,” he stated.

Millán Garcia-Tola, Global Director of Hydrogen at Iberdrola, highlighted the project's significance for Iberdrola’s green hydrogen strategy. “This collaboration with BP reflects our strong commitment to advancing green hydrogen as a key driver of industrial decarbonization. The plant will convert 200 GWh/year of Iberdrola’s renewable energy into green hydrogen, supporting BP’s decarbonization goals. This partnership demonstrates our shared values and dedication to long-term decarbonization,” Garcia-Tola said. He added that Iberdrola would leverage its existing green hydrogen expertise to expedite the project’s development.

Olvido Moraleda, President of BP Energía España, noted that the project is a milestone in their strategy. “This initiative underscores the importance of collaboration with companies like Iberdrola and public-private partnerships. It will not only advance the Castellón refinery’s transformation but also strengthen the economic and industrial fabric of the Valencia region,” she explained.

Mario Ruiz-Tagle, CEO of Iberdrola Spain, described the project as a testament to their strategic alliance with BP. “The Castellón project showcases our ability to develop a new industrial model based on the green hydrogen value chain, which is emission-free and electrified. It’s an example of how collaboration and appropriate incentives can drive the green hydrogen economy, attract investment, and create quality jobs. We are committed to making Spain a technological leader and expanding the green hydrogen industry in Europe.”

The 25 MW electrolyzer will use renewable electricity supplied through a power purchase agreement (PPA) with Iberdrola, drawing 200 GWh/year from their photovoltaic and wind projects. The electrolyzer, featuring five 5 MW modules with proton exchange membrane (PEM) technology supplied by Plug Power, will produce green hydrogen compliant with European standards. This hydrogen will replace some of the grey hydrogen currently used at the refinery, potentially reducing CO2 emissions by 23,000 tons annually, equivalent to the emissions of 5,000 cars. The project is expected to create up to 500 direct jobs during construction.

BP is also exploring opportunities to expand the project’s capacity in future phases, potentially supplying green hydrogen to key industries in the Valencia region, including ceramics, chemicals, and heavy transport. This announcement follows BP’s recent letter of intent with the Valencian Government, aimed at enhancing the region’s role in the energy transition and establishing a joint committee to oversee the refinery’s transformation into an integrated energy hub.

In recent months, Iberdrola has secured several long-term partnerships to further the decarbonization of the economy, including ventures with Norges Bank Investment Management, Masdar, Mapfre, Energy Infrastructure Partners, and GIC.