Repsol banks on biogas to meet hydrogen targets

Spain's integrated energy company Repsol is relying on biomethane steam reforming at its refineries to meet 36pc of its target to have green hydrogen production equivalent to 552MW of electrolysers operating in 2025.

The firm plans to invest €611mn ($710mn) to develop its 2021-2025 targeted hydrogen production capacity, 44.7pc or €273mn of which will be dedicated to the steam reforming of biogas equivalent to 200MW in electrolysis production capacity.

Biomethane is the fastest way to build up green hydrogen capacity and help meet Repsol's targets, which include ramping up production capacity to 1.9GW of electrolysis equivalent from 2025 to 2030, according to Repsol's director of hydrogen Tomas Malango.

The remaining €338mn of planned capital expenditure to 2025 has been earmarked for electrolysers, with a planned 232MW of capacity at Repsol's three largest refineries in Bilbao, Cartagena and Tarragona, costing an estimated €179mn, and €32mn to be invested in 10MW of electrolysis at the company's planned pilot synthetic fuels plant in Bilbao.

Repsol is also planning to invest €102mn in 110MW of electrolysers owned by third parties in the mobility and industrial sectors through joint ventures that will include hydrogen offtake agreements for the integrated energy company, whose 900,000 b/d of refineries make it the largest producer and consumer of hydrogen in Spain, accounting for 60pc of the market.

Repsol's hydrogen strategy is expected to require an additional net investment of some €700mn in the development of 1.795GW of wind and photovoltaic (PV) solar generation, with equity stakes in the Spanish projects ranging from 50-100pc and a 95pc capacity factor for the installed renewables.

The company is assuming 3.25MW of renewables will be required to power each megawatt of electrolysis, with 70pc of the power generated by the plants expected to be used for hydrogen production and the rest sold to Spain's power grid.

Repsol announced its first hydrogen production from steam reforming biomethane yesterday, two weeks after providing details on one of the first electrolysers it is planning to build on a commercial scale, a 2.5MW unit in Bilbao expected to come online in the second half of 2022.

The firm's hydrogen investments are not expected to break even at the earnings before interest, taxes, depreciation and amortisation (Ebitda) level before 2025 and then generate a total of €1.24bn of Ebitda in 2026-2030, and €2.37bn in 2031-2035, according to the company.

"If hydrogen is going to fly in Europe, Spain is going to be at the head of it and Repsol has the size, teams and capacity to make that happen," chief executive Josu Jon Imaz said.

By Jonathan Gleave