Advances in Renewable Energy and the Rise of Green Hydrogen in Spain

The transition to renewable energy is enabling Spain to move away from fossil fuels within its electricity grids, driven by an irreversible energy shift. The green transformation is advancing rapidly, with renewable sources contributing 56% to the electricity mix in 2024, marking an 11% increase in production—a national record—with a capacity of 149 Terawatt hours (TWh). A significant milestone was reached as solar photovoltaics, accounting for 17% of the electricity mix, surpassed combined cycle sources to claim third place. Wind energy led the way at 23%, followed by nuclear energy at 19%, while hydraulic energy ranked fifth at 13%. Meanwhile, fossil fuel technologies saw a decline, with combined cycle sources down by 24% and coal generating just 1.1% of electricity—the lowest share in history.

This surge in renewable energy is crucial for achieving the goal of having 81% of the national electricity supply come from renewables by 2030. By November 22, 2024, renewable energy production had already exceeded the total levels achieved in all of 2023, a year that also set a generation cap of 134,649 gigawatt-hours (GWh), representing 56% of the country’s electricity supply, with renewables forming 63% of the total installed power capacity. Red Eléctrica reported an 18% increase in transport network investments in the third quarter, amounting to €603 million in capital deployed—a trend mirrored by the private sector.

As green projects proliferate in the domestic market, they have now overtaken fossil fuels as the primary energy source. These initiatives are mainly focused on solar and wind energy, with a notable rise in alternatives like hydrogen, particularly green hydrogen. However, significant challenges remain. The International Energy Agency (IEA) emphasizes the need for the development of international connection and transport networks to export renewable surpluses, the adaptation of electricity infrastructure to meet supply demands, and the promotion of energy-intensive sectors such as transportation and heating, which must speed up the journey toward energy neutrality.

To address these challenges, Spain must continue to establish technological services, enhance AI capabilities, and intensify regulatory changes. The recent Green Algorithms Plan, which has been under review since 2021 and incorporates feedback from multinational companies, is part of the National AI Strategy (ENIA) aimed at fostering an innovation ecosystem that anticipates highly reliable management models in energy facilities. Green AI is vital for optimizing water flow rate controls in hydropower plants and boosting renewable energy contributions to the energy mix based on real-time technical data.

Additionally, the implementation of ReFuelEU Aviation in January introduced Sustainable Aviation Fuel (SAF) quotas, increasing from 2% in 2025 to 70% by 2050.

The Role of Green Hydrogen and Biomethane

Energy companies are championing decarbonization through concrete projects, with Moeve leading the way in constructing the Andalusian Green Hydrogen Valley, Europe’s most ambitious renewable hydrogen project, set to begin this summer with an investment of €3 billion. By the end of 2024, Spain submitted its updated Integrated National Energy and Climate Plan (PNIEC) to Brussels, identifying green hydrogen as a pivotal strategy for decarbonizing the economy, targeting 12 GW of electrolysis capacity by 2030. Numerous initiatives throughout Spain share this vision of productive integration of green hydrogen through electrolysis from renewable sources, focusing on its consumption in industrial processes and nearby locations. This includes its direct use as a substitute for gray hydrogen or natural gas, its conversion into ammonia or methanol, and its application as a fuel for transport and decarbonization in port areas.

However, Spain’s sustainability efforts still have room for improvement by 2025, particularly in the electric vehicle sector, where progress has been slow. By July 2024, electric vehicle registrations in Europe showed a modest increase of 1.3% (712,637 units), while plug-in hybrid sales fell by 2.5% (392,284 units). Currently, these vehicles represent 3% of the car fleet in the EU and 1.4% in Spain. In this context, accelerating circular economy projects becomes essential, supported by a specific action plan with five focal areas—production, consumption, waste, raw materials, and water—backed by €2.169 billion. Various sectors, including textiles and plastics, will receive targeted funding of €300 million.

Furthermore, favorable credit lines from ICO and the European Investment Bank (EIB) have been expanded, having already allocated €11.6 billion in the domestic market to finance circular economy initiatives between 2019 and 2023. Biomethane is emerging as another lever for change; this biogas transforms waste into energy and has proven particularly effective in Germany, the United Kingdom, Denmark, and France. Spain is beginning to recognize its potential, with new investments on the horizon, including Moeve’s €600 million project to build 30 plants. Other alternatives, such as biomass, still struggle to find a competitive edge. The U.S. Energy Information Administration projects that by 2025 and 2026, biomass will remain marginal within the 25% contribution of renewables to its energy mix.

Globally, many decarbonization efforts are expected to focus on direct CO2 capture from the atmosphere, with significant expansion anticipated this year among industrialized nations. By 2025, a new facility in Texas is projected to capture 500,000 tons of carbon dioxide from the air annually, selling carbon offset credits to major companies in the CO2 market, making it the largest facility of its kind in the world, surpassing Iceland’s Mammoth facility.

The future of energy storage also hinges on batteries, with China currently controlling global supply chains. The Chinese company, Contemporary Amperex Technology (CATL), holds 37% of the global market and continues to supply major automotive manufacturers like Tesla, Ford, and Volkswagen. Additionally, the second generation of biofuels is developing roots in Spain. In 2024, Moeve and its partners began constructing a new 2G biofuel plant, with a total investment of €1.2 billion. This plant, located in the ‘La Rábida’ Energy Park in Palos de la Frontera (Huelva), will utilize agricultural waste and used cooking oils as raw materials, boasting a flexible production capacity of 500,000 tons of renewable diesel and sustainable aviation fuel (SAF) for air, sea, and land transport.

These developments have significant socio-economic implications. A study by Moeve and Manpower indicates that green hydrogen and biofuels are expected to generate 1.7 million jobs in the EU, contributing to a €145 billion increase in European GDP by 2040. Spain is leading green hydrogen production in Europe, with the highest number of jobs related to green molecules, totaling 181,000—outpacing the United Kingdom (173,000), Germany (145,000), and France (105,000).