Electrical Network Collapse Threatening Green Hydrogen Investment in Spain

The collapse of Spains electrical networks is significantly undermining investments in green hydrogen, with multibillion-euro projects being forced to relocate abroad.

Despite Spains leadership in renewable energy generation, its failure to develop sufficient grid infrastructure has emerged as a critical obstacle. The lack of a proper foundation, with inadequate electrical networks to support growing demand, has culminated in the collapse of ambitious projects.

During the recent third edition of Enagas s Hydrogen Technical Day, experts disclosed that the insufficient grid capacity has led companies to abandon Spanish sites in favour of neighbouring Portugal. Stegra, for example, planned a 1.2 GW green hydrogen hub, but Red Electrica refused the necessary connection. Portugals REN network awarded the capacity at Sines port, attracting close to 3 billion euros in investment and over 500 direct jobs, simply because Spain could not accommodate the project.

Similarly, Moeve faced frustrations while attempting to expand in Huelva, with the electricity operator not providing the requested capacity, thus limiting its electrolysis plans from 400 MW to 300 MW. These instances underscore the broader issue of insufficient grid infrastructure hampering renewable and hydrogen sector growth.

The sector also faces delays due to regulatory bottlenecks. The absence of clear, predictable legislation is hindering large-scale investments, with sector insiders reporting a lack of established frameworks despite the adoption of the EU Hydrogen and Renewable Gases Directive.

Although green hydrogen was a key government priority following the Ukraine invasion, progress remains sluggish. High costs, combined with technical and regulatory barriers like network collapse, make it difficult for Spain to develop a sustainable and competitive hydrogen industry.

Unless decisive regulatory and infrastructural reforms are implemented promptly, the future of green hydrogen in Spain remains uncertain, risking its position as a leader in renewable energy and decarbonisation efforts.