Portugal may receive €2.3 billion green hydrogen project

  • ECO News
  • 16 May 2022

There are three locations under study for the construction of a green hydrogen plant proposed by H2 Green Steel and Iberdrola. One of them is Portugal.

Portugal is one of the locations being studied by Swedish H2 Green Steel and Iberdrola to install a 1 gigawatt green hydrogen production unit, in a total investment of €2.3 billion.

The Swedish company announced the partnership with the Spanish electric company in December. Contacted by ECO, H2 Green Steel clarified that three locations in the Iberian Peninsula are being studied, one of them in Portugal, but giving no information about the specific regions. ECO also contacted Iberdrola, which did not reply.

H2 Green Steel is a company specialising in producing “green steel” by de-carbonising the iron ore transformation process. Green hydrogen is one of the elements of that process. The steel industry is one of the most polluting, accounting for 8% of global CO2 emissions.

At the time, the two companies said that the sites being evaluated “will have access to renewable electricity at a reduced cost and the necessary infrastructure to successfully operate a green hydrogen, green iron and green steel business”.

Sines has been the most sought-after destination in Portugal for the development of green hydrogen projects. In April a 1.3 billion project led by Portuguese-Dutch Madoqua Ventures and backed by Danish Copenhagen Infrastructure Partners and Dutch Power 2X was launched, in which most of the investment will be channelled to the city on the Alentejo coast.

GreenH2Atlantic, a consortium of 13 companies and partners, which includes EDP and Galp, plans to install a 100 MW electrolyser in the old coal-fired power plant in Sines. The oil company has meanwhile announced a second 100 MW project for the same region.

According to H2 Green Steel, the 1 gigawatt output will be used as fuel for a direct steel reduction furnace (a production method that uses natural gas or hydrogen and has less environmental impact), with the capacity to produce up to two million tonnes of “green steel” and reduce up to 95% of CO2 emissions. The electrolyzer will be owned by H2 Green Steel and Iberdrola, while the direct reduction unit will be owned and operated by the Swedish company.

In the joint statement, the companies also said “that they will explore the opportunity to jointly build a green steel production unit capable of producing between 2.5 and 5 million tonnes of green steel per year”. H2 Green Steel, founded in 2020, is developing its first such plant in Boden, northern Sweden, which is expected to be operational by 2024.

H2 Green Steel’s founder and largest shareholder is Vargas, a holding company that was also one of the initial investors in Swedish lithium-ion battery manufacturer Northvolt, which in December closed a joint venture with Galp (Aurora) to create “Europe’s largest and most sustainable lithium conversion plant”, with an annual production capacity of up to 35,000 tonnes of lithium hydroxide.

The two companies announced, in mid-April, the choice of Setúbal, more specifically the Sapec Bay Industrial Park, to install the refinery. The start of commercial operations is scheduled for 2026.