Production

Portugal’s largest grey hydrogen consumer invests in green H2 plant to displace 20% of its demand

Galp’s refinery in Sines will have 100MW of electrolysers supplied by Plug Power by 2025

Galp's refinery in Sines, Portugal.
Galp's refinery in Sines, Portugal.Photo: Galp
Portuguese oil and gas firm Galp has taken a final investment decision (FID) on a large green hydrogen project at its refinery in Sines — which is Portugal’s largest consumer of grey H2 produced from fossil gas.

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Galp will invest €250m ($266m) in 100MW of proton exchange membrane (PEM) electrolysers supplied by US green hydrogen technology firm Plug Power.

The Portuguese firm estimates the electrolysers will produce 15,000 tonnes a year of green hydrogen, which would replace 20% of the grey H2 currently used by the refinery

PEM electrolysers, while generally more expensive than their alkaline equivalents, are often touted as better suited to ramping production up and down with fluctuating input from renewable electricity.

However, Galp’s project will be supplied by renewables contracted via long-term supply agreements as well as from within its own portfolio, rather than a direct connection. The plant will also use industrial recycled water, with expected annual consumption representing less than 3% of the average annual needs of the refinery.

The Portuguese firm reportedly aims to eventually scale up capacity to 600MW in order to fully decarbonise the hydrogen used at Sines, which is Portugal's only refinery.

While Galp estimates that the 100MW alone could reduce scope 1 and 2 emissions by 110,000 tonnes of CO2-equivalent per year, and ultimately aims to halve these operational greenhouse gas emissions by 2030, the switch will not have an impact on the larger scope 3 emissions from the fuels it produces.

The Portuguese firm has also today pulled the trigger on €400m of investment into a 270,000 tonnes-a-year advanced biofuels unit at the Sines refinery. The company has also implied that it will also explore hydrogen for mobility and e-fuels production as potential opportunities — although no decision on either has been made.

The capital cost of the green hydrogen plant is also likely to have risen from initial estimates. While Galp has not disclosed exactly how it has chosen to finance the project, local reports put the cost at €217m in June this year.

Galp is also one of the partners on Green H2 Atlantic, an EDP-led 100MW renewable hydrogen project set to be sited at a decommissioned coal plant also in Sines, which was awarded a grant from the EU’s Innovation Fund this summer.

The exact amount was not disclosed, likely because the Innovation Fund only provides up to 40% of the grant before the start of operations, with the rest unlocked as the facility demonstrates a reduction in CO2 emissions over time.
However, the consortium had also previously secured a €30m grant from the EU’s Horizon 2020 programme in January 2022 — nearly half the expected €76m cost. Prior to the Innovation Fund award, senior executives at EDP indicated to Hydrogen Insight that FID on Green H2 Atlantic could be delayed unless it accessed further subsidies.

Green H2 Atlantic is set to use cheaper alkaline electrolysers, which could account for why it is a third of the cost of Galp’s Sines refinery project, as estimated in December 2021.

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Published 25 September 2023, 10:27Updated 25 September 2023, 10:31