The investment bank is reluctant to finance the hydrogen connection between Spain and France promoted by Ribera

Connect Spain with the central European hydrogen network it costs 1 billion euros, according to Enagás' estimate. H2Med, the project that will connect the country with Portugal and France it needs a total of 2.5 billion. The expectations are, at the moment, that everything comes through public funds and European funds because it does not attract private money.

As financial sources explain to Vozpópuli, The H2Med project is not attractive for private banks. Doubts about the future prices of this energy alternative, the unknown demand and the difficulties in coordinating between the three countries mean that traditional financiers of this type of project are fleeing this process.

“The failure of the Midcat causes many doubts in any international project between France and Spain”, they point out from the financial sector. The experience with the MidCat gas pipeline, which required an initial investment of 3.1 billion euros to cross the Pyrenees to use Spain's regasification capacity and stop being an energy island to improve the gas connections of the Iberian Peninsula.

“It was shown that we do not row in the same direction and that each advance is torpedoed,” these sources add. Work on the Midcat started in 2010 in Martorell, but was paralyzed the following year, just 100 kilometers from the border, due to the lack of interest from France. In 2013, Spain managed to get MidCat on the list of projects of common interest of the European Union with an estimated investment of 470 million euros..

Finally, in 2019, the regulatory bodies of France and Spain once again paralyzed the works due to the high cost of the infrastructure and the existence of the Larrau-Irún connection.

With the energy crisis of 2022, and the need to become independent from Russian gas, Germany claimed Spain and France progress to reactivate this infrastructure. A movement from which another 'greener' option such as H2Med emerged.

An initial phase

The banks consider that the project is not attractive to finance. But from the sector they point out that H2Med is still far from the entry point of banking. Enagás pointed out that The financing process of the hydroduct involves contact with the agents to see what the interesting capacity might be like and get on the list Projects of Common Interest (PCI) to ensure that part of it is financed through European funds.

The European Commission included H2Med in its November list, which will be confirmed in early 2024 by Parliament and the Council. From then on, heThe projects would be eligible to receive funding from the “Connecting Europe Facility” to begin studies and constructionwhich would allow work to be expedited to guarantee the start of construction from 2026 and its entry into operation in 2030. Before, they would expect an entry into the scene of the bank would appear if it is possible to demonstrate that the project is solid and has viability.

France and Spain advance in hydrogen

Teresa Ribera Last Tuesday he held a meeting with the French Ministers of Economy, Bruno Le Maire, and that of Territorial Cohesion, Christophe Béchu, in Paris. A meeting where they wanted to demonstrate “the firm will” to strengthen interconnections and a common objective was agreed to “immediately convene” bilateral ministerial groups to advance both electrical connections and green hydrogen.

In total, 1,000 million euros is the cost of hydrogen infrastructure in Spain, but now depends on the exact distribution among all the countries participating in the project of the necessary investments and the financing formula also by the consumers of infrastructure hydrogen. Spain and France assure that they have opened a bilateral commission to address this matter directly.