Iberdrola España and bp are moving forward with plans to expand green hydrogen production at the Castellón refinery after receiving approval for up to €211 million in funding under the European Union’s IPCEI Hy2USE programme. The funding will support the partners as they evaluate additional renewable hydrogen capacity at the site, reinforcing Spain’s role in Europe’s emerging hydrogen economy.
The investment comes as the companies reach another important milestone: construction of their 25 MW green hydrogen plant has been completed, and the facility has entered the commissioning phase. Developed through their joint venture, Castellón Green Hydrogen S.L., the plant is expected to begin producing renewable hydrogen before the end of the year and is set to become Spain’s largest operational green hydrogen facility in 2026.
Powered by renewable electricity, the electrolyser will produce green hydrogen to replace fossil-based hydrogen and natural gas currently used in refinery operations. The project is designed to reduce emissions from industrial processes while supporting the broader decarbonisation of the Valencia region.
Beyond refining, the partners are also exploring opportunities to supply green hydrogen to other hard-to-abate industries, including the ceramics and chemical sectors, where electrification remains challenging and hydrogen offers a promising low-carbon alternative.
The newly approved funding was awarded by Spain’s Ministry for Ecological Transition and the Demographic Challenge, through the Institute for Energy Diversification and Saving (IDAE), under the Important Projects of Common European Interest (IPCEI) initiative. The expansion plans also align with the European Union’s recently announced ACCELERATE EU package, which aims to strengthen industrial competitiveness, accelerate decarbonisation, and improve Europe’s energy independence.
The Castellón project has already attracted additional public support, including €15 million from Spain’s Recovery, Transformation and Resilience Plan financed through the EU’s NextGenerationEU programme. The Energy Technology Institute (ITE) in Valencia is also participating in the development of the project.
As Europe continues to scale up renewable hydrogen production, projects such as Castellón are expected to play an increasingly important role in reducing industrial emissions while creating domestic supplies of clean energy for sectors where direct electrification is not feasible. The latest funding approval further strengthens the project’s position as one of Spain’s flagship green hydrogen developments.
