Spain Backs Green Hydrogen Expansion at Castellon Refinery

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

Spain's Iberdrola and BP have received a funding boost from the Spanish government to extend their green hydrogen operations at the Castellón refinery.

Spain has re-allocated up to 211 million euro (US$240 million) for the expansion of green hydrogen development by BP and Iberdrola at the Castellón refinery.

The money was allocated from the European Commission's (EC's) Important Project of Common European Interest (IPCEI) Hy2USE programme. Through their joint venture company Castellón Green Hydrogen S.L they have already completed the construction of a 25-megawatt (MW) electrolyser powered by renewable energy at the site, which is due for commissioning in the coming months. It is expected to become Spain's largest operational green hydrogen plant producing 2,800 tonnes of hydrogen annually which would be used to partially offset the refinery's current use of grey hydrogen. According to Industrial Info Resources data show four projects in the pipeline worth more than US$180 million. The partners claimed that in the future "the plant will help industrial customers replace natural gas with renewable energy produced in Spain. Renewable hydrogen could also play an important role in decarbonising hard-to-abate sectors such as ceramics and chemicals." 

Green Hydrogen Uncertainty

The investment boost comes at a difficult time for green hydrogen development in Europe. Late last year, Industrial Info reported that Europe will only be able to supply slightly more than half of the green hydrogen it needs to meet its 2030 targets, with only a quarter of announced projects currently under construction. For additional information, see October 15, 2025, article - Europe's Green Hydrogen Dream Not Matching Reality. In 2023, BP said that it wanted to build at least 200 MW of capacity at the Castellon refinery, predicting that it could scale it up to 2,000 MW by 2030. However, that was before the company pulled back from renewable energy investments to refocus on oil and gas. 

Dropped Projects 

In late 2024, BP said it had stopped work on 18 early-stage hydrogen projects following poor financial results. In the past year, BP has ditched some of its most high profile hydrogen projects. In December, BP dropped plans to build one of the U.K.'s largest planned blue hydrogen projects, H2Teesside (H2T), due to an ongoing dispute over whether the site should be used for an artificial intelligence (AI) data center instead. The project would have supplied 1.2 gigawatts (GW) of hydrogen production in the Teesside region, more than 10% of the U.K.'s 2030 hydrogen production target. For additional information, see December 08, 2025, article - BP Drops One of U.K.'s Largest Hydrogen Projects. Last month, it cancelled the 105 MW H2Kwinana renewable hydrogen project in the Pilbara region in western Australia after failing to secure funding from the government's Hydrogen Headstart programme.

Spain's Green Hydrogen Goals

In 2023, the Spanish government set out a target of having 12 gigawatts (GW) of electrolysers producing green hydrogen by 2030. This was three times the original target announced in 2020 of 4 GW. It was boosted to support an industrial goal to have 74% of the hydrogen used by industry be green by 2030. Industrial Info Resources is tracking more than 140 green hydrogen-related projects in Spain worth almost US$20 billion in potential investment. 

Key Takeaways

• Green hydrogen expansion at BP's Castellon refinery backed by the Spanish government.
• Spain wants 12 gigawatts (GW) of electrolysers producing green hydrogen by 2030. 
• Industrial Info Resources is tracking more than 140 green hydrogen-related projects in Spain worth almost US$20 billion in potential investment. 

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).