The hydrogen sector is facing a decisive year in 2025, with high expectations regarding final investment decisions and the regulatory framework that will define its development in Spain.

According to Brais Armiño Franco, partner at AtlantHy, this will be a crucial period to determine whether current projects thrive or stagnate: “Many companies will decide whether to continue with their hydrogen departments depending on market clarity and regulatory signals,” he states.

One of the key milestones will be the transposition of the Renewable Energy Directive (RED III) into Spanish law. This regulatory framework will require hydrogen consumption quotas in the industry, establish incentives and penalties, and outline the conditions for meeting European objectives.

“I hope that RED III will apply incentives, not penalties, and that it will be very demanding with the development of renewable parks in short timeframes,” says the analyst in a conversation with Energía Estratégica España.

Meanwhile, the delegated act on low-carbon hydrogen is emerging as another essential component in the regulatory landscape.

Although it is still in the drafting phase, AtlantHy’s partner believes it could bring clarity to projects and opines, “The draft gave a little cheer, but it is necessary for this act to materialize with a two-year outlook.”

At the project level, the market is waiting for positive signals. The expert estimates that 1 GW of final investment decisions will be made in 2025, an ambitious target reflecting the interest in developing large green hydrogen initiatives.

This volume includes flagship projects from companies such as Moeve, Repsol, and Iberdrola, in addition to initiatives financed through aid programs and auctions.

However, international competitiveness remains a challenge. Despite progress, Spain faces obstacles in executing investments.

“It has been seen that developing a plant in Spain is not as easy as we imagined, and we are seeing many important global projects being closed,” reflects the analyst.

For this reason, Armiño Franco also emphasizes the importance of the Spanish government avoiding decisions that could discourage sector development, such as the “energy tax,” as companies “need a clear framework that allows for the definition of sustainable business models backed by strong incentives and regulations.”

Second Auction

The second European auction for renewable hydrogen, organized by the European Commission, opened on December 3, 2024, and will remain open until February 20, 2025.

With a budget of up to €1.2 billion, this auction aims to boost renewable hydrogen production in Europe, offering selected bidders a fixed premium in euros per kilogram of hydrogen produced for ten years.

Spain has also shown its commitment by joining the Auction as a Service (AaaS) mechanism, allocating between €280 million and €400 million from the Recovery and Resilience Plan.

This approach not only reinforces Spain’s leadership but also helps overcome key barriers, such as the lack of consolidated demand and the need for a clear and stable regulatory framework that turns interest into competitive projects.

“These types of auctions are fundamental to provide the market signals needed to encourage companies to keep investing in hydrogen, especially in such a critical year as 2025,” concludes Armiño Franco.