Iberdrola and bp secure €211m backing to explore expanded green hydrogen production at Castellón refinery
Iberdrola España and bp have received support to explore a major expansion of green hydrogen production at the Castellón refinery after Spain approved the reallocation of up to €211 million in funding under the European Union’s Important Projects of Common European Interest (IPCEI) Hy2Use programme.
The funding, approved by Spain’s Ministry for Ecological Transition and the Demographic Challenge through the Institute for Energy Diversification and Saving (IDAE), will support ongoing assessments of additional green hydrogen capacity at the Castellón site, reinforcing the region’s role in Europe’s clean energy transition.
The initiative aligns with the European Union’s recently launched ACCELERATE EU package, designed to accelerate industrial decarbonisation, strengthen energy security and reduce dependence on imported fossil fuels. The programme aims to boost investment in strategic clean energy technologies across the bloc, including renewable hydrogen production.
The latest funding support builds on the existing partnership between Iberdrola España and bp, which has already completed construction of a 25-megawatt green hydrogen plant at the Castellón refinery through their joint venture, Castellón Green Hydrogen S.L. The project has now entered the commissioning and testing phase ahead of full operations.
The facility is expected to begin producing renewable hydrogen before the end of 2026 and is set to become Spain’s largest operational green hydrogen plant once fully online. The project represents one of the country’s most significant industrial decarbonisation initiatives and is intended to replace natural gas consumption with renewable hydrogen in refinery operations.
Beyond refining, the companies are also evaluating opportunities to supply green hydrogen to other hard-to-abate sectors, including the ceramics and chemical industries, where electrification remains difficult and hydrogen is increasingly viewed as a viable pathway to reducing carbon emissions.
The Castellón project forms part of a broader strategy to establish a regional hydrogen economy in the Valencia region while supporting Spain’s ambitions to become a leading producer of renewable hydrogen in Europe. By utilising domestically generated renewable electricity to produce hydrogen, the initiative also contributes to improving energy independence and reducing exposure to volatile fossil fuel markets.
The development has attracted additional support from European and national funding programmes. The project previously secured €15 million through Spain’s Innovative Value Chain and Knowledge in Renewable Hydrogen programmes, financed under the Recovery, Transformation and Resilience Plan and backed by the European Union’s NextGenerationEU recovery fund.
The Energy Technology Institute (ITE) in Valencia is also participating in the project, supporting innovation and technological development associated with renewable hydrogen production.
With construction completed and commissioning now underway, the Castellón facility is emerging as one of Spain’s flagship hydrogen projects. The newly approved IPCEI funding could pave the way for further capacity expansion, strengthening the role of green hydrogen in industrial decarbonisation and supporting Europe’s broader clean energy and energy security objectives.
