The European Commission (EC) has approved a €1.2bn ($1.3bn) Spanish scheme to bolster investments in renewable hydrogen production.

Approved under the state aid Temporary Crisis and Transition Framework (TCTF), the scheme is designed to support the establishment of hydrogen clusters or valleys, integral to Spain's transition to a greener economy.

The scheme, to be entirely funded through the Recovery and Resilience Facility (RRF), follows the commission's positive assessment of Spain's Recovery and Resilience Plan and subsequent adoption by the European Council.

It targets investments in renewable hydrogen production facilities with a minimum installed capacity of 100MW.

The supported investments may include the production of renewable hydrogen-derived fuels, storage solutions and the generation of renewable electricity.

To qualify for the scheme, applicants must demonstrate secured agreements with off-takers for at least 60% of the anticipated production of renewable hydrogen or its derivatives.

The aid will be distributed as direct grants to cover the investment costs of the projects, with the amount for each beneficiary determined through a competitive bidding process.

The commission's review confirmed that the Spanish scheme aligns with the TCTF conditions, which stipulate that aid must be allocated based on a predefined scheme volume and budget through a transparent and non-discriminatory bidding process. The aid must also be granted before 31 December 2025.

The commission concluded that the Spanish scheme is essential, suitable and proportionate for expediting the green transition and fostering the development of key economic activities.

The European Commission competition policy in charge executive vice-president Margrethe Vestager stated: “This €1.2bn scheme will enable Spain to accelerate the deployment of renewable hydrogen capacities, in line with the EU Hydrogen Strategy and the European Green Deal.

“The scheme will also help Spain reduce its dependence on imported fossil fuels, while minimising any potential distortions to competition.”

In February 2024, the EC established an industrial alliance to advance the development of small modular reactors, to enable their commercial deployment in Europe by the early 2030s.