By Pietro Lombardi
MADRID (Reuters) - Spain's Iberdrola (BME:IBE) is slashing its green hydrogen ambitions by almost two thirds after delays in getting funding for some projects it has already presented, highlighting the challenges faced by a market that depends heavily on subsidies.
The company now expects to produce roughly 120,000 tons of green hydrogen a year by 2030, compared with a previous goal of 350,000 tons, a spokesperson confirmed to Reuters on Friday.
The move comes as Europe's top utility by market capitalization embarks on a three-year, $45 billion investment drive to expand and upgrade power grids, add renewable capacity and bolster energy storage on both side of the Atlantic.
The company presented the strategic update on Thursday, when Chief Financial Officer José Sainz Armada mentioned the cut, without giving details.
"The only target that we are diminishing is hydrogen," he told analysts and investors.
"Not because we don't want to do hydrogen, we would love to do more projects, but we are still waiting for the funds to come through for the projects that we have presented," he added.
Green hydrogen is produced using renewable energy and is seen as key to decarbonise Europe's economy in the future. However, given its cost, green hydrogen projects in general are not competitive without subsidies.
The International Energy Agency warned that higher production costs and limited demand are hobbling the market.
"We have developed a wide portfolio of projects to supply hydrogen, as long as the price guarantees their profitability," Chief Executive Armando Martinez said on Thursday.
"Incentives may be needed to get so."
The company has two plants in operation and another under construction. It also has various projects in the pipeline. The largest one, planned in the southern Spanish region of Andalusia, will have an initial capacity of around 22,000 tonnes a year. The project has been selected to receive EU funds and is now waiting for the allocation of the funds by the Spanish government, the CEO said.