Ref. Ares(2023)1307025 - 22/02/2023
BRIEFING FOR STEFANO GRASSI
H2MED – MEETING WITH ENAGAS
12 January 2023, Brussels
SCENE SETTING
The project H2Med (formerly called ‘BarMar’) is an interconnection project for hydrogen
infrastructure between Portugal, Spain and France submitted for PCI status by 4 different gas
transmission operators: Enagas (Spain), GRTgaz and Terega (France), REN (Portugal). The next list of
PCIs is to enter into force in early 2024.
It was agreed at the level of Leaders in the presence of the Commission President in the Alicante
summit on 8/9 December 2022.
The project includes onshore pipelines, offshore pipelines and compressor stations. The project
includes 2 cross-border connections, namely Celorico-Zamora (PT-ES) and Barcelona-Marseille (ES-
FR).
The main part of the project is a hydrogen interconnection project between Spain and France which
will be ready in 2030, enabling the transport of 2 Mt/y of H2 (i.e. a 10% of the expected EU
consumption targets by 2030: 20 Mt/y) and contributing to the emergence of one of the major
import corridors via the Mediterranean identified in the REPowerEU plan. The main part of the
project concerns a 455 km, 28 inch diameter offshore pipeline connecting Barcelona and Marseille,
reaching a maximum depth of 2560 m.
The other interconnector is developed alongside the interconnection between Portugal and Spain,
consisting of a 248 km onshore pipeline (162 km in Portugal, 86 km in Spain) of 28’’ diameter as well
as a compressor station in Zamora. The interconnection will have a capacity of 0.75 Mt/yr of H2.
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LTT
Welcome words
The REPowerEU plan to provide 10 million tonnes of domestic
renewable hydrogen and 10 million tonnes of imported renewable
hydrogen will require infrastructure to bring large volumes of
hydrogen to the end-consumers.
This will require several hydrogen corridors from the South of
Europe towards demand centres and industrial clusters inland.
We welcome the H2Med as it has the potential to ensure the
crucial connection between the Iberian Peninsula and France for
transporting renewable hydrogen towards North-Western and
Central Europe.
To be effective, the pipeline will need be complemented in time by
a hydrogen grid on the Iberian Peninsula and by a South-North
connection in France and further on. I would be interested in
knowing from you the plans of Enagas to create a hydrogen
backbone in Spain, with capacity to integrate in the grid and
transport 2 Mt of hydrogen through Spain towards France.
PCI and interconnection angle
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H2Med and complementary projects have indeed been proposed
as part of the on-going selection of Projects of Common Interest
under the TEN-E Regulation.
The Commission will work with Member States, Regulators and
project promotors in regional groups to come up with the first list of
Projects of Common and of Projects of Mutual Interest under the
revised TEN-E Regulation by the 4th quarter of 2023 (entry into force
in early 2024).
On potential CEF funding
The Connection Europe Facility (CEF) is one key source of EU
funding for energy infrastructure. In order to be eligible for a CEF
grant, the H2Med project would first need to be selected as a
project of common interest (PCI) under the TEN-E Regulation. The
first Union List of Projects of Common and of Mutual Interest will
be final by early 2024. A CEF call for selected projects would follow
in the course of 2024.
Moreover, CEF funding, like all Union funding, for PCIs is a last
resort. The CEF budget is limited, and not all PCIs receive CEF
funding. In fact, most PCIs should be commercially viable. The TEN-
E Regulation already provides other advantages, procedural and
regulatory, to PCIs.
CEF grants are awarded through recurring calls for proposals,
where several PCIs compete for a limited call budget, meaning that
not all proposals will be selected for funding.
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Hydrogen Bank
Another potential source of financing can come through the future
European Hydrogen Bank, via support to hydrogen producers and
consumers, who will in turn pay the transport fees of using the H2
corridors.
The key objectives of the European Hydrogen Bank is i) to cover
the cost gap between renewable and fossil hydrogen, whilst
leveraging a maximum amount of private financing into subsidized
projects and ii) to contribute to early market formation by
providing price/cost discovery.
In terms of scope, the Hydrogen Bank would be a temporary
mechanism designed to complement already existing public
funding resources for development of the production, use and
infrastructure of hydrogen at both EU and MS level.
The European Hydrogen Bank will be a financial policy instrument
(not as a physical entity) which de-risks and creates bankable
hydrogen projects, ensures competition on EU-level and avoids
over-subsidizing projects;
o will include a domestic and an international leg of
operations;
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o Our intention is to develop the final design of the
Hydrogen Bank during 2023, including as regards the
adoption of legal proposals.
While the Bank will initially focus on supporting domestic
hydrogen production, our REPowerEU objectives also include the
import of 10 Mt/year of renewable hydrogen from Third countries
by 2030. I understand that with its 2 Mt/year capacity (roughly 66
TWh/y), H2Med will still have some capacity left (around 45
TWh/y) to transport H2 which is not produced in the Iberian
Peninsula. How would the imported H2 reach the Iberian
Peninsula? Are there any plans of interconnections with the North
of Africa or are these volumes expected to arrive by sea? How
feasible would the scalability of the H2Med, should additional
domestic production or imports be available?
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Background
Project outline
The project H2Med (formerly called ‘BarMar’) is an interconnection project for hydrogen
infrastructure between Portugal, Spain and France submitted for PCI status by 4 different gas
transmission operators: Enagas (Spain), GRTgaz and Terega (France), REN (Portugal). It was agreed at
the level of Leaders in the presence of the Commission President in the Alicante summit on 8/9
December 2022.
The project includes onshore pipelines, offshore pipelines and compressor stations. The project
includes 2 cross-border connections, namely Celorico-Zamora (PT-ES) and Barcelona-Marseille (ES-
FR).
The main part of the project is a hydrogen interconnection project between Spain and France which
will be ready in 2030, enabling the transport of 2 Mt/y of H2 and contributing to the emergence of
one of the major import corridors via the Mediterranean identified in the REPowerEU plan. The main
part of the project concerns a 455 km, 28 inch diameter offshore pipeline connecting Barcelona and
Marseille, reaching a maximum depth of 2560 m.
The interconnector is developed alongside the gas interconnection between Portugal and Spain,
consisting of a 248 km onshore pipeline (162 km in Portugal, 86 km in Spain) of 28’’ diameter as well
as a compressor station in Zamora. The interconnection will have a capacity of 0.75 Mt/yr of H2.
It is still unclear how the hydrogen will be transported inside the Spanish network (i.e. if and which
ones sections of the Spanish gas network will be refurbished to become H2-dedicated pipelines) and
similarly, which infrastructure plans have GRTgaz and Terega to transport the hydrogen as from
Marseille.
Alternative routes
There is no other comparable South-North corridor connecting the Iberian Penisula with North-
Western/Central Europe. We received PCI applications for a South-North hydrogen
corridor/backbone within Italy. We see another South-North corridor emerging in South-Eastern
Europe, albeit much smaller in capacity. We have not received project proposals for hydrogen
interconnectors from Africa as part of the on-going PCI-PMI selection, although according to the
numbers presented by the three governments, the H2Med would have an excess of transportation
capacity in 2030 (only 45 TWh/y of the 66 TWh/y capacity of the interconnector with France would
be filled with H2 produced in the Iberian peninsula -see slide 4 in the PPT in annex, where 33 TWh
represents 1 Mt of H2).
The preliminary cost estimation of the project is around 2.5 billion EUR. The project is in pre-
feasibility stage, construction should start in 2026, and the focus is now on allocating funding for
first phase studies (15 million EUR).
Earlier competing project
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Before the announcement of the H2Med project, Snam and Enagas had signed a MoU aiming for a
feasibility study on a sub-sea pipeline from Barcelona to Tuscany designed to transport either
natural gas or hydrogen. The pipeline capacity under assessment was in the range of 10-15bcm/year
of natural gas. Our understanding from discussions with the operators is however that this project
was abandoned/frozen, provided good progress with H2Med.
H2 potential of the Iberian Peninsula
The Commission is about to kick off a study to assess the H2 potential of the Iberian Peninsula and
related infrastructure needs, steered by the High-Level Group Southwest Europe.
Potential CEF funding
If the Barmar / H2Med project is included in the list of projects of common interest (PCIs)
established under the TEN-E Regulation, this would bring a series of advantages: First, the project
would benefit from accelerated authorisation procedures and procedural simplification (notably a
one-stop shop in the Member States concerned). Second, depending on the applicable regulatory
regime, it could also benefit from the regulatory tools that the TEN-E Regulation offers to facilitate
the implementation of PCIs: the cross-border cost allocation procedure (to share construction costs
among the relevant Member States according to the respective benefits the project procures them),
or the granting of regulatory incentives by national regulatory authorities (NRAs).
Third, it would be eligible to apply for EU funding under the Connecting Europe Facility (CEF).
However, CEF grants, like all Union grants, are a “last resort” option to support PCIs after other
support measures provided by the TEN-E Regulation have been exhausted. Given that the CEF
budget is limited (EUR 5.8 billion over the whole MFF period 2021-2027, of which approx. EUR 1.6
billion have already been committed to other projects), only a small number of PCIs will therefore
receive funding, and only after applying for a CEF call where their proposals will be competing with
funding proposals from other PCIs for a call budget that is lower than the sum of all grants
requested.
Among the highest CEF grants awarded for PCIs so far, there are the following (with the year of the
call in brackets): a total of EUR 1.2 billion for the synchronisation of the Baltic States (several calls);
EUR 579 million for the French-Spanish electricity interconnector Biscay Bay (2017); EUR 531 million
for the French-Irish electricity interconnector Celtic (2019); EUR 656 million for the Cypriot-Greek
electricity interconnector EuroAsia (2021).
Attachment: PowerPoint on H2Med used for the Alicante Summit at Leaders’ level, 8/9 December
2022
20221130H2MED_E
N_v10.pptx
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