Portugal looks to guarantee hydrogen demand with 10-year tender
The Portuguese government has unveiled details of its first hydrogen tender, with which it plans to secure decade-long contracts for the clean fuel later this year.
Portugal’s Last Resort Wholesale Trader is seeking to award 10-year contracts for 3,000 tons a year of green hydrogen at a maximum price of €127/MWh and 10,000 tons a year of renewable methane at €62/MWh through competitive auction.
The hydrogen and renewable methane will then be sold onto gas suppliers to be blended into the grid.
No date has been set for the auction, but the exact procedures of the tender must be submitted to the government by the Directorate-General for Energy and Geology by 30 May, 2023, and be published by 30 June.
While the volumes are relatively low for this first tender, it is an “important pilot project for the adoption of domestic H2 production in Europe,” according to Jorgo Chatzimarkakis, CEO of Hydrogen Europe.
Portugal’s Last Resort Wholesale Trader is seeking to award 10-year contracts for 3,000 tons a year of green hydrogen at a maximum price of €127/MWh and 10,000 tons a year of renewable methane at €62/MWh through competitive auction.
Portugal’s approach not only supports its goal of decarbonising the gas supply in the country, but it also guarantees demand for suppliers who might otherwise hesitate to make the necessary investments in hydrogen production infrastructure.
The EU has sought to tackle this challenge with the creation of the €3 billion European Hydrogen Bank, which aims to be a market maker in the supply and demand of hydrogen. While the UK has been a leader in the development of a subsidy regime with the Hydrogen Business Model, it is yet to tackle this particular issue, maybe assuming that demand from industry will be sufficient to ensure there is always a market for competitively priced supply.
Portugal aims to tap its plentiful solar and wind resources to become a major exporter of green hydrogen, the country’s environment minister Duarte Cordeiro said in November. It already produces 60% of its electricity from renewables and aims to reach 80% by 2026.
(Pictured) Lisbon, Portugal. The Portuguese government has unveiled details of its first hydrogen tender, with which it plans to secure decade-long contracts for the clean fuel later this year.
The H2MED hydrogen pipeline project between France and Spain will have a spur linking it to Portugal, which currently produces the cheapest renewable hydrogen in the EU, according to Hydrogen Europe.
Other bold policy initiatives from Portugal include a decision in December to scrap mandatory environmental assessments from green hydrogen projects in a bid to accelerate investment in the sector.
There has been significant corporate activity as well. Portugal’s largest utility EDP and oil and gas company Galp Energia are both planning to build green hydrogen production facilities in the industrial hub of Sines.
The nation’s three largest glass manufacturers and two biggest cement makers, which account for 10% of Portugal’s industrial carbon emissions, are also working together to build a green hydrogen plant. Simultaneously here in the UK St Helens-based Pilkington, part of the NSG Group, has been a leader in the glass sector’s switch to low carbon fuels, and has completed two trials of hydrogen firing in a glass furnace.
Portugal is of course a very different country to the UK. With domestic demand for clean hydrogen expected to outstrip supply for some time in the UK, there is currently less need for such a policy here.
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