BP and Iberdrola secure €211 million for expansion of Castellón green hydrogen project

BP and Iberdrola secure €211 million for expansion of Castellón green hydrogen project

Spain reallocates up to €211 million in European funding to the green hydrogen project of BP and Iberdrola in Castellón. The money comes from the EU's IPCEI Hy2Use programme — Important Projects of Common European Interest focused on hydrogen — and is managed through Spain's energy institute IDAE.

The 25 MW electrolyzer plant at BP's Castellón refinery is now built. The joint venture Castellón Green Hydrogen S.L. — equally owned by BP and Iberdrola — is currently undertaking commissioning and testing. Production is expected to start before the end of 2026. If that timeline holds, the facility is set to become Spain's largest operational green hydrogen plant.

What does the plant produce?

The 25 MW Plug Power electrolyser is powered by renewable electricity via a PPA with Iberdrola, supplying 200 GWh per year from solar and wind projects. The plant is expected to produce 2,800 tonnes of green hydrogen annually. That replaces part of the grey hydrogen the refinery currently consumes in its processes — avoiding an estimated 23,000 tonnes of CO2 per year.

The €211 million is intended to support further exploration of expanded production capacity. No concrete expansion plans have been finalised; both companies are assessing the options. In 2023, BP spoke of plans for at least 200 MW of electrolysis capacity at the site by 2027, with ambitions up to 2 GW by 2030, but no updated agreement on those broader ambitions has been communicated since.

Why does this matter beyond the refinery?

Castellón sits in the Valencian region, an area with significant energy-intensive industry: ceramics, chemicals and petrochemicals. Green hydrogen at industrial scale opens pathways to decarbonising processes where electrification is difficult or impossible. For heavy transport over the longer term, local hydrogen production at this kind of scale is a relevant building block — though this project's primary focus is industrial offtake.

The funding structure illustrates how the European IPCEI instrument works: large cross-border projects with strategic value receive priority in the allocation of national funds reserved for European hydrogen priorities.

Sources

- Gasworld (gasworld.com, June 2026)

- H2 Bulletin (h2bulletin.com, June 2026)

- ESG News (esgnews.com, June 2026)

- BP press release FID September 2024 (bp.com)

- Iberdrola press release construction start (iberdrola.com, February 2025)