bp, a British Multinational oil and gas company, and Iberdrola, a Spanish electricity utility company, have approved the construction of a 25 MW green hydrogen project at bp’s Castellón refinery, expected to become operational in the second half of 2026. This marks the first joint hydrogen project undertaken by the two companies through their Castellón Green Hydrogen S.L. joint venture.
Supported by the Technology Institute of Energy (ITE), the project has secured €15 million in funding from Spain’s Recovery, Transformation, and Resilience Plan under the European Union’s NextGenerationEU initiative.
“bp’s first investment decision for an industrial scale project is an important step forward for our hydrogen business. This also demonstrates the strength of partners combining their strengths to advance a nascent energy source that has the potential to play a meaningful role in decarbonising industry. Castellón refinery can lead the way with its transformation,” said Felipe Arbelaez, bp’s senior vice president, hydrogen & CCS.
The electrolyzer will be powered by 200 GWh/year of renewable energy, supplied through a power purchase agreement (PPA) with Iberdrola’s photovoltaic and wind projects. The electrolyzer will consist of five 5 MW modules, using proton exchange membrane (PEM) technology provided by Plug Power.
Millán Garcia-Tola, Global Director of Hydrogen in Iberdrola said “This partnership with bp and our project is another step in Iberdrola’s firm and real commitment to promote green hydrogen as a key vector for industrial decarbonization. The plant will convert 200 GWh/yr of Iberdrola’s renewable energy into green hydrogen that will contribute to bp’s decarbonization strategy, in another example of close collaboration between both companies, reliable partners that share values as long term decarbonization commitment. Iberdrola will apply all the experience of its existing green hydrogen plants to optimize and accelerate the development of this project”.
The green hydrogen produced will comply with European standards for Renewable Fuels of Non-Biological Origin (RFNBO), supporting the transformation of bp’s Castellón refinery into an integrated energy hub. The plant will produce approximately 2,800 tons of green hydrogen annually, replacing part of the grey hydrogen currently derived from natural gas. This transition is expected to reduce CO2 emissions by 23,000 tons per year, equivalent to the emissions of 5,000 cars, and could generate up to 500 jobs during construction.
“Through this project we not only advance the transformation of our infrastructure in Castellón, but also aim to strengthen the economic fabric and industrial capacity of the entire Valencia region,” said Olvido Moraleda, President of bp Energía España.
Mario Ruiz-Tagle, CEO of Iberdrola Spain said, “Projects like Castellón show that, with the collaboration of all agents in the sector and the appropriate incentives, it is possible to develop a new industrial model based on the green hydrogen value chain. The green hydrogen economy is emissions free, electrified, attracts investment and creates quality jobs in the region. This is the true energy transition. We continue to work with committed partners to position Spain as a technological benchmark, boosting the creation of a green hydrogen industry in Europe.”
Looking ahead, bp is exploring options to expand capacity in future phases, with the potential to supply green hydrogen to industries in the Valencia region, including the ceramics, chemical, and heavy transport sectors.
The project comes just weeks after bp signed a letter of intent with the Valencian Government to strengthen the region’s role in the energy transition. This agreement has led to the creation of a joint working committee to oversee the transformation of bp’s Castellón refinery into a key integrated energy hub.
