Refhyne & Refhyne II: Europe’s Flagship Green Hydrogen Projects at Shell's Rhineland Refinery
- ReneEnergy.com
- 3 days ago
- 6 min read
As the green hydrogen economy begins to move from theory to execution, few projects symbolize Europe’s leadership and ambition as clearly as Refhyne and its successor, Refhyne II.
These industrial-scale electrolyzer installations at Shell’s Rhineland Refinery in Germany represent a bridge between legacy fossil fuel infrastructure and a future defined by renewable-powered hydrogen.
Backed by EU funding, industry collaboration, and long-term decarbonization mandates, the Refhyne project is not just producing hydrogen—it's rewriting the economics and operational logic of industrial energy systems.
In this deep dive, we’ll explore the technical architecture, economics, Levelized Cost of Hydrogen (LCOH), operational performance, and global context of both Refhyne I and Refhyne II. We'll compare them with global benchmarks like India’s Panipat Refinery and Spain’s Puertollano plant and close with takeaways for developers, investors, and policymakers.
Project Overview: From Pilot to Mega-Scale
Refhyne I, launched in 2021, was one of Europe’s first 10 MW PEM electrolyzer projects.
Built at Shell’s Energy and Chemicals Park in Wesseling (part of the larger Rhineland Refinery), it was developed by a consortium including Shell, ITM Power, SINTEF, Sphera, and Element Energy. It received €10 million in funding from the EU
Fuel Cells and Hydrogen Joint Undertaking (FCH JU).
Refhyne II is the follow-up project currently in the pipeline. It scales up the electrolyzer capacity to 100 MW and aims to produce over 10,000 tonnes of green hydrogen per year.
The goal is to replace a significant portion of grey hydrogen currently used in refinery operations, especially for desulfurization, and to prepare for integration into broader mobility and industrial hydrogen markets. Refhyne I was commissioned in July 2021, Refhyne II secured funding in 2022 with €32 million from the EU Innovation Fund, and it is expected to begin operations by late 2025 or early 2026.
Technical Configuration
Refhyne I uses PEM electrolyzers manufactured by ITM Power. It operates at 10 MW capacity and produces approximately 1,300 tonnes of green hydrogen annually.
Electricity is sourced from renewable grid power backed by guarantees of origin. The hydrogen is used primarily for desulfurization within Shell’s refinery.
Refhyne II will significantly expand capacity to 100 MW, targeting an annual output of 10,000 tonnes of hydrogen.
The project is expected to save around 100,000 tonnes of CO2 emissions annually. It occupies a two-hectare site and will be powered by a combination of direct renewable Power Purchase Agreements (PPAs) and smart grid integration.
Both projects utilize Proton Exchange Membrane (PEM) electrolyzers for their high flexibility, fast response to intermittent renewable energy, and suitability for industrial operations.
Economics and LCOH
While Refhyne I focused more on proving the feasibility of green hydrogen integration into existing refinery infrastructure than on cost reduction, its LCOH is estimated between €7–8 per kg ($7.5–8.5 USD/kg). This high cost is attributed to early-stage technology expenses and relatively low utilization rates.
Refhyne II, in contrast, aims to significantly reduce production costs. The target LCOH for Refhyne II is approximately €3–4 per kg, or about $3.2–4.3 USD/kg. This reduction will be achieved through economies of scale, improved electrolyzer efficiency, and lower renewable electricity prices secured via PPAs.
Critical factors influencing the LCOH include the electrolyzer CAPEX—ITM Power targets $500–600 per kW for 100 MW systems—renewable electricity pricing (targeting less than $40/MWh), and higher utilization rates, with Refhyne II aiming for over 4,000 full load hours annually.
Funding and Incentives
Government and EU support have played a vital role in the viability of both Refhyne projects. Refhyne I received €10 million from the Fuel Cells and Hydrogen Joint Undertaking under Horizon 2020. Refhyne II secured €32 million in funding from the EU Innovation Fund, in addition to capital investment from Shell.
The German National Hydrogen Strategy further supports large-scale hydrogen initiatives, with €9 billion allocated to build a comprehensive hydrogen economy. The Rhineland region, home to the projects, is also part of Germany’s “HyPerformer” region, which supports hydrogen infrastructure deployment and innovation.
Use Case: Refinery Integration
Hydrogen is an essential input in refining, especially for hydrocracking and desulfurization processes. Shell’s Wesseling facility has historically relied on grey hydrogen produced via steam methane reforming (SMR). The introduction of green hydrogen into this setting represents a significant step in industrial decarbonization.
Green hydrogen produced onsite allows Shell to reduce Scope 1 and Scope 2 emissions, align with future EU regulatory requirements, and avoid the rising cost of carbon credits under the EU Emissions Trading System. This strategic shift also ensures the longevity and environmental compliance of Shell’s refinery operations in the face of growing climate policy pressures.
Panipat and Puertollano Comparison
Compared with India’s Panipat project and Spain’s Puertollano project, Refhyne II stands out in several dimensions. Refhyne II is a 100 MW facility aiming to produce 10,000 tonnes of hydrogen annually, just like Panipat, but with a more aggressive CO2 abatement strategy. Puertollano operates at a smaller scale of 20 MW and produces around 3,000 tonnes annually.
In terms of LCOH, Refhyne II targets €3–4/kg, compared to Panipat’s tendered cost of $4.75/kg and Puertollano’s modeled range of $4.5–6.5/kg.
All three projects share similar use cases focused on industrial decarbonization, but differ in electricity sourcing. Refhyne II will utilize a combination of grid and PPA-based renewables, Panipat leverages India’s hybrid renewable grid, and Puertollano relies heavily on onsite solar generation.
All three demonstrate a shift from pilot to commercial scale, but Refhyne is unique in its deep integration with EU policy instruments and scale-up roadmap.
Key Challenges
Even with substantial funding, Refhyne II is not without obstacles. The most significant is the high upfront capital cost associated with large-scale PEM systems. These systems still cost more than $500 per kW, and while costs are declining, financing remains a challenge. Electricity pricing volatility also poses a risk. Long-term price stability, even with PPAs, is difficult to guarantee in Europe’s dynamic power markets.
Permitting is another hurdle. Coordination is needed between multiple agencies covering environmental, energy, and industrial regulations. Finally, while the refinery serves as an initial offtaker, additional offtakers will be necessary to fully utilize the electrolyzer’s capacity and justify future expansions.
Developer Lessons
Refhyne provides valuable insights for project developers worldwide. Starting with an existing demand base—such as a refinery already using grey hydrogen—can significantly de-risk early projects. Combining private capital with public funding, especially from institutions like the EU Innovation Fund, can accelerate project timelines and scale.
A phased, modular approach—beginning with 10 MW and scaling to 100 MW—helps manage integration risk and gather operational data. Developers should also plan proactively for grid interaction, as smart controls, curtailment planning, and time-of-use electricity pricing all affect the bottom line.
Global Implications
Refhyne II is one of the first global examples of a green hydrogen project that scales tenfold within the same site. This provides a rare opportunity to benchmark how electrolyzer stacks perform in real industrial conditions across different phases of scale. It also contributes to industry-wide learning around operations and maintenance optimization, grid integration, and regulatory compliance.
Furthermore, Refhyne serves as a proving ground for emerging hydrogen transport models. Future plans include pipeline transport and ammonia conversion, connecting the project to wider European hydrogen corridors and export ambitions. Its design also incorporates certification and emissions accounting aligned with EU standards, making it a testbed for cross-border hydrogen trade frameworks.
Conclusion: Europe’s Hydrogen Showcase
Refhyne and Refhyne II are more than infrastructure—they are strategic experiments in industrial transformation. They represent Shell’s long-term commitment to decarbonizing its global operations and Germany’s national objective to become a hydrogen leader. When compared to projects in India and Spain, Refhyne sets a new standard for policy alignment, technological scale, and grid integration.
For developers and investors, the lesson is clear. Green hydrogen is no longer a speculative technology—it is commercially viable today when structured around industrial use, scale, and policy leverage. Success comes from aligning infrastructure with offtake, grid conditions, and financing tools, all while keeping a firm eye on LCOH.
RESOURCES & TRAINING:
Green Hydrogen Mastery Course (10 Modules) – $497. This is a certification program covering electrolyzers, LCOH modeling, permitting, and project finance. You can find the full course at
Green Hydrogen Excel Financial Model – $297. This model helps you calculate project-specific LCOH using IRR, DSCR, and full cash flow projections. You can get it at
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