Spain’s $150M Green Hydrogen Gamble: Inside Puertollano’s Industrial Revolution

ReneEnergy.com
Aug 3
5 min read

In southern Spain, a major milestone in the energy transition is quietly taking shape. The Puertollano Green Hydrogen Plant, developed by Iberdrola in partnership with Fertiberia, is now one of the largest operational green hydrogen hubs in Europe. And unlike many hydrogen projects still in development, this one is already delivering: producing over 3,000 tons of green hydrogen annually, powering ammonia production, and cutting nearly 50,000 tonnes of CO2 every year.

With a total investment of $150 million, the Puertollano facility is more than a technology demonstration. It is a blueprint for how to build a fully integrated, cost-effective, industrial-scale green hydrogen ecosystem—and it offers key lessons for the global hydrogen economy. In this article, we’ll explore what makes this project work, why its economics are competitive, and how it compares to India’s Panipat Refinery green hydrogen project, which achieved a publicly declared LCOH of just $4.75/kg.

The Puertollano Setup: Solar, Storage, and Electrolysis

Puertollano's core is a tightly integrated system that includes:

A 20 MW Proton Exchange Membrane (PEM) electrolyzer
A 100 MW solar PV array
A 20 MWh lithium-ion battery storage system

The electricity generated from the solar PV powers the electrolyzer, which splits purified water into hydrogen and oxygen. The hydrogen is used directly in Fertiberia’s adjacent ammonia production facility—replacing a portion of grey hydrogen derived from natural gas. This direct use avoids the need for compression, liquefaction, or long-term storage, keeping operational costs and complexity low.

Output and Impact

Each year, the plant generates around 3,000 tonnes of green hydrogen, which directly feeds ammonia synthesis. This displaces a significant amount of grey hydrogen and results in CO2 savings of roughly 48,000 tonnes per year.

This immediate utilization model—where hydrogen is produced and consumed onsite—is one of Puertollano’s most strategic advantages. It maximizes efficiency, reduces infrastructure costs, and increases economic certainty.

Financials and Cost Efficiency

The total project cost of €150 million (roughly $165 million USD) covers the solar installation, battery storage, electrolyzer system, and integration with Fertiberia’s facilities. While that’s a significant investment, it yields impressive unit economics. Although exact LCOH figures are not publicly disclosed, analysts estimate that Puertollano's LCOH ranges from $4.50 to $6.50/kg, depending on factors like solar capacity factor, OPEX, and electrolyzer utilization rate.

Spain's solar resources offer a major advantage. The Castilla-La Mancha region enjoys high solar irradiance and land availability, enabling solar LCOE as low as $30/MWh. This drives down the electricity cost component of LCOH, which typically represents 50–70% of total hydrogen production cost.

Panipat Comparison: India’s Transparent Cost Leader

India’s Panipat project, developed by IndianOil and awarded to L&T under a BOO contract, is a strong counterpart to Puertollano. Like Puertollano, it produces hydrogen for use in an adjacent refinery process. The Panipat project’s standout feature is price transparency: its Levelized Cost of Hydrogen (LCOH) is publicly declared at INR 397/kg, or about $4.75/kg USD.

This figure was discovered through competitive tendering, with five bids received in the final round. The hydrogen produced will be used to replace grey hydrogen in refinery desulfurization, similar to how Fertiberia uses it for ammonia production.

Key Comparison Points:

Metric	Puertollano (Spain)	Panipat (India)
Electrolyzer Capacity	20 MW	Estimated 20–30 MW
Electricity Source	100 MW Solar + 20 MWh Battery	Likely hybrid renewables
Annual Output	~3,000 tons/year	~10,000 tons/year (targeted)
LCOH (est.)	$4.50–$6.50/kg	$4.75/kg (public tendered price)
Use Case	Green ammonia (Fertiberia)	Refinery desulfurization (IOCL)
Delivery Model	Direct integration	BOO + IndianOil offtake contract
Government Support	EU & Spanish Roadmap	National Green Hydrogen Mission
Commissioning	2022	Target: December 2027

Both projects demonstrate the value of co-located hydrogen production and consumption, eliminating costly infrastructure and offtake risk.

Policy and Incentive Landscape

Puertollano was supported through European Commission climate funds and Spain’s national green hydrogen program. It is fully aligned with the European Green Deal and the EU Hydrogen Strategy, which aims to install 40 GW of electrolyzers by 2030.

India’s Panipat project is part of the National Green Hydrogen Mission, which includes production-linked incentives (PLIs), CAPEX subsidies, and a broader target of 5 MMT of green hydrogen production by 2030. The mission also encourages BOO contracts and viability gap funding.

Environmental Considerations: Water Use and Land Impact

Electrolysis requires approximately 9 liters of water per kg of hydrogen. For Puertollano, that means over 27 million liters of purified water per year. However, the plant uses recycled water streams, making the process sustainable.

In India, water scarcity can be more acute in certain regions. Therefore, water sourcing strategies for Panipat will be critical to long-term sustainability and replicability.

Technology Overview

Both projects use PEM electrolyzers, though specific OEMs are not always disclosed. PEM technology is ideal for pairing with variable renewable power due to its fast response time and compact footprint.

Puertollano uses PEM paired with bifacial solar panels and a lithium-ion battery buffer.
Panipat is expected to use PEM as well, though details on storage integration have not been disclosed.

Grid Interaction and Storage

Puertollano’s 20 MWh battery helps smooth out short-term fluctuations in solar generation, but the facility does not rely on long-duration hydrogen storage. Instead, it matches hydrogen production with real-time ammonia demand.

In India, Panipat may face challenges with grid reliability and peak pricing. If hybrid solar-wind setups are used, time-of-day optimization will be crucial.

Strategic Lessons for Developers

Both Puertollano and Panipat offer lessons for green hydrogen developers worldwide:

Start with known demand: Supplying existing hydrogen users reduces market uncertainty.
Co-locate production and use: Minimizes transport, storage, and distribution costs.
Involve EPC and offtaker early: BOO and PPP models attract stronger bids and enable financeability.
Use price discovery mechanisms: Tendering, as seen in Panipat, creates realistic cost baselines.
Keep systems lean: Storage and oversized systems should be justified by use-case, not speculation.

Can These Projects Scale?

Absolutely. Fertiberia has already announced plans to scale its green ammonia production further using similar integrated systems. Iberdrola plans to replicate the Puertollano model in multiple European markets.

Likewise, IndianOil has announced plans to extend green hydrogen integration at refineries in Mathura, Gujarat, and Paradip. The $4.75/kg benchmark now becomes the reference point for other tenders in India.

Conclusion

The Puertollano Green Hydrogen Plant proves that industrial decarbonization with green hydrogen is not just possible, but already underway. When compared with India’s Panipat project, it becomes clear that different geographies, markets, and financing models can still deliver similar outcomes when projects are well-designed.

While Panipat stands out for its transparent, cost-competitive tender, Puertollano excels through tight technical integration, renewables synergy, and real-time offtake. Together, they serve as templates for how to de-risk hydrogen infrastructure and accelerate investment.