Hello. Good afternoon or good morning, everybody, depending on where you're connecting from, and welcome to Iberdrola's webinar on green hydrogen. My name is Diego Morón. I head the Investor Relations department of the group, and I will be your host today. First of all, we sincerely hope you're all in good health and keeping safe.
In today's session, we would like to share the view of our company on green hydrogen, the technology, the prospects, the business opportunities, and our plans to make it an avenue of growth in the coming years. For that purpose, I'm delighted to be joined today by three of the people that are leading our efforts in this field. Agustín Delgado, our Innovation, Sustainability, and Quality Director, Millán García-Tola, our Hydrogen Unit Director, and Diego Díaz Pilas, our Head of Ventures and Technology.
After the presentations, we will give you the opportunity to ask questions to our panel of experts. In order to give as many people as possible the opportunity to participate, we would kindly request that you ask a maximum of two questions. Also, as a reminder, you can only ask questions through the phone and not through the webcast. Now, without further ado, I will leave the virtual floor to my colleagues. Please, Agustín, the floor is yours.
Thank you, Diego, for this kind introduction, and thank you all of you for attending this seminar today about hydrogen. I will try to explain in this first part what are the challenges, our vision, and the opportunities that the hydrogen economy could bring to Iberdrola. Technology and vision first. Well, I assume that most of you already know who Iberdrola is. Just as a quick reminder, we're a company with more than 52 MW of installed capacity. More than 62% of that is emission-free, providing energy to over 100 million people, more than 330,000 employees, and one of the top three worldwide utilities.
With a very global footprint. Europe, Brazil, U.S., Mexico, U.K. New businesses in Australia, Japan, and Sweden. As you already know, we have a heavy investment plan for the next period of 2020-2025 of EUR 75 billion. Well, as you are aware, the evolution of the technology is being driven by the decarbonization challenge. We strongly believe that this decarbonization challenge is going to be met mostly by the decarbonization of the electricity system, plus the capability of the system, the networks, and the storage to incorporate all this electricity into the energy system.
This is very important for this decade in which we are entering, the end use of the energy that we use in our daily life. We strongly believe that most of the uses of energy can be electrified very much, in a very intense way in this coming decade, and could be up to 80% of the demand. This goes from mobility to heat and cooling to industrial processes and so on. The truth it is that electricity is not going to be able to meet all the energy uses, and we will need another energy carrier for those uses. This energy carrier for sure is hydrogen, green hydrogen.
This is the scope of the meeting that we have today. As I said, what are those opportunities for hydrogen, for green hydrogen to be as an energy carrier, and industrial feedstock in the future? Well, we think that green hydrogen is going to play a key role for those hard-to-abate sectors. There will be, from our understanding, two different steps in this hydrogen economy adoption. First, it is the current opportunities that green hydrogen can take, and it is about the industrial feedstock that hydrogen is used today. As industrial feedstock in the refinery, in the chemical industries, in the fertilizers industry.
In the future, there will be those hard-to-abate sectors like maritime transportation, air transportation, or high-temperature industries that probably will use, in an intensive way, hydrogen. As I said, hydrogen is being produced today, but mostly it is being produced with fossil fuels. 75% is being produced through a steam reforming of oil and mostly natural gas. 24% is still today being produced by gasification of coal, and this is emitting a lot of CO2 to the atmosphere. Less than 1% is being produced through electrolysis.
In total, 80 million tons of hydrogen being produced worldwide, with a range of prices between EUR 1-2 per kilogram, and with emissions similar to a country like Germany. Right? If we want to electrify all this current hydrogen production today, the increase in the power demand worldwide would be 3,000 TW per year. That is close to 10% of the power demand of the world today. In total, Europe, it is 10% of that, 8.3 million tons of hydrogen, and Spain, it is close to half a million tons of hydrogen. As you know, and I mentioned before, there are different types of hydrogen.
For those types of hydrogen, the industry has assigned different colors. Gray hydrogen, it is the hydrogen that is being produced today with fossil fuels, mostly through steam reforming or through gasification, and it emits CO2. We have Blue hydrogen. Blue hydrogen, it is the hydrogen that is being produced with fossil fuels, also with the steam reforming or gasification, but with carbon capture. All the CO2 that is being produced, close to 90% of the CO2 that is being produced, would be captured and stored underground, to produce, let's say, cleaner hydrogen.
Then we have green hydrogen. This is the hydrogen that is being produced through electrolysis, splitting the water molecule into hydrogen and oxygen, being produced with renewable electricity and this way of production is consistent with the net zero route that is going to be needed in 2050. You will also hear about other colors of hydrogen, like turquoise hydrogen with pyrolysis of natural gas, pink hydrogen, purple hydrogen, and so forth. I think they are much less interesting, and we will focus on blue and green hydrogen to explain it further. Why green hydrogen, we think, is going to be the winner?
If we have, in the left-hand side of the presentation, you have gray hydrogen and the amount of CO2 that it produces with per every kilogram of hydrogen. If you use blue hydrogen, you can capture close to eight kilogram of CO2. For sure, you have to store it somewhere, and this is not that easy, and it adds cost to the process. You have green hydrogen that doesn't have any kind of direct CO2 emissions. Gray hydrogen is not an option because of the emissions. Blue hydrogen is perceived as an option in the short term, but still it has 10% emissions.
Still, you need to manage eight kilograms of CO2 per kilogram of hydrogen. It's not that easy to store that amount of CO2 underground. When green hydrogen becomes cheaper, that we think it can happen at the end of the decade, then you will find yourself with stranded assets that capture all this CO2 and put it into the ground. We think that green hydrogen is the option, is the winner, is more suitable for co-located production and use, in the same way as hydrogen is being produced today. Given the lower final cost, it's going to be the most competitive source of hydrogen by 2030.
Strongly believe green hydrogen is the only environmental and economically viable option for the future. There are two different technologies to produce this green hydrogen, alkaline and proton exchange membrane technology. Both of them are commercial, although alkaline is more mature. Alkaline is a technology that is much more mature. It has been providing hydrogen and oxygen to many industrial processes so far, and it has lower CapEx today, but a bigger footprint and limited dynamical operation.
If you want to accelerate or decelerate, or you have more renewables at some point or less renewable at some point, alkaline will answer in a more difficult way than PEM. Efficiency range, a bit better than PEM today. PEM, it's commercial, but also it's improving very much thanks to the development of fuel cells. It has higher CapEx today because it has platinum electrodes and low duration of membrane. You can have a high output pressure, and it's well-suited for flexible operations. PEM exchange membrane, my colleague, Millán, will talk about that later on.
It's the technology that we have chosen for our first demonstration project in Puertollano because of the footprint that is smaller than the alkaline one. Both technologies, I think, are well-placed and will have a role to play in the future, but both need volume to improve cost and performance. Going down the learning curve will be very needed, and volume will help to write down this learning curve. Today, gray hydrogen for sure is cheaper. As I said, it's one to two kilograms per hydrogen. Green hydrogen is much more expensive, close to EUR 5- EUR 6 per kilogram in standard conditions.
We strongly think that this cost could go down in this decade to a range of EUR 3- EUR 2 per kilogram. Why is that? Three factors need to be taken into account. The cost of the electricity that we supply the electrolyzer, the number of hours that we have this cheap renewable electricity, and the CapEx of the electrolyzers. How are those factors going to evolve in the coming years? We expect that we are going to have cheaper and cheaper renewable electricity. You know these figures, solar photovoltaics probably will expand the capacity four times in this decade and decrease the cost another 40%.
Onshore wind, three times, decrease cost another 30%, and offshore wind, seven times, 50% decrease in cost. We are going to have electricity systems with a high percentage of renewables. Besides, we are going to have increasing load factors from renewables. That will mean that we will have cheap electricity for the electrolyzers during more time. This is the third factor I was mentioning before. If we look at the cost of electrolyzers, we can see in these two graphs how it's going to be the learning curve. Today, we can think about EUR 1,000 per kilowatt installed.
We think it's feasible to think about EUR 400 per kilowatt installed of electrolyzer at the end of the decade. This will help very much to produce this green hydrogen in the range of EUR 2 - EUR 3 per kilogram, and to be able to supply this industrial consumption, ammonia and refineries, at the end of the decade, in a competitive way with the gray hydrogen. Not mentioning blue hydrogen, that, as I said before, I don't think it's an option.
As a recall, the conclusions, electricity cost, electrolyzer CapEx, electrolyzer load factor, all of them together will help us to achieve those EUR 2-EUR 3 per kilogram, and it will make it competitive with the gray hydrogen if we add to the gray hydrogen the CO2 cost that probably they will increase. If we look at the targets for 2030, we can see that European Union has set up a target of 40 GW of electrolyzers in the European Union. So far, there have been many countries that has issued their strategies. We are close to 25 GW of targets from specific countries of the European Union to achieve this goal.
It is not only the European Union. We can see that there are also some other countries like Australia, like South Korea, like Japan, like China, Russia, Morocco, that are also setting their strategies. We strongly believe that hydrogen production is going to be a reality in this decade, that it's going to be an opportunity for the development of renewables. We need to develop the hydrogen value chain to make it real. I think the first step that we have to take, it is to be able to produce this cheap green hydrogen.
Why I'm saying that? Because there are some issues still with storage and transportation of the hydrogen. If we want to store 20% of the annual hydrogen demand, we would need to build 14,000 salt caverns, which would cost a huge amount of money. Anything around storing seasonal energy into hydrogen to somehow flat the renewable production is something that is going to be very, very far in the future because of the cost of storing hydrogen in a proper way. Right? The same is applicable to the hydrogen transportation.
To transport hydrogen is very expensive. Hydrogen is a very small molecule, and to transport it, you need to compress it at very high pressures. You need to liquefy it, or you need to transform it into something like ammonia or something. Transporting hydrogen adds cost to hydrogen, and that's the reason why most of the current hydrogen facilities today are co-located to the demand sites that are using this hydrogen.
This is what we try to do, to produce cheap hydrogen very close to the demand facility that is going to use this hydrogen because of the cost and because of the cost of the transportation and because of the cost of storing this hydrogen. We can also talk about future uses of hydrogen apart from being an industrial feedstock. Fuel cell electric vehicles that are today very expensive, they should be in the world like 7,000 fuel cell electric vehicles compared to millions of electric vehicles, battery electric vehicles. The reason for that, it is that apart from they are more expensive, it is that they are much less efficient.
If we make an analysis of well-to-tank and tank-to-wheel of efficiency in the use of energy of different vehicles, we can see that for battery electric vehicles, we have an efficiency close to 70%, but for fuel cell electric vehicles, we have an efficiency of around 25%. The reason it is that we have to convert electricity into hydrogen and then back hydrogen into electricity, and all these conversions steal efficiency from your process. We strongly think that hydrogen will not play a relevant role in light transportation.
It will play a role in the decarbonization of long-distance heavy transportation like maritime, probably in the form of ammonia or some other forms of transportation, like very long-distance heavy-duty vehicles. I don't think we will see light-duty vehicles running on hydrogen, and they will be running on batteries. If we talk about residential heating, to produce hydrogen, that it is a very high added value product and then burn it's a shame.
It's a pity, because it has so lower efficiency compared to a heat pump that we don't think is going to be competitive, neither today nor in the future. Hydrogen to be served at homes would require so high investment in gas networks, in adaptation, and apart from that, the total cost of ownership of a system like this wouldn't have high efficiency, and the cost wouldn't make it viable.
We strongly believe that blending hydrogen with natural gas is not the solution, is not a route or a path for net zero, and to convert the whole gas infrastructure into hydrogen is too much expensive and is not that efficient at all. We don't think this is going to be a bright future for hydrogen applications. So far so good. I will leave the floor to my colleague, Millán, who will explain our plans as a company.
Thank you very much, Agustín. Always a pleasure to hear you. Very interesting. Now let's move on to the next chapter of the agenda. Please, Millán, now the floor is yours. Thank you.
Fantastic view of what's our forecast for hydrogen in the future. First of all, we have to say that we see hydrogen as a global opportunity to follow and help the growing of the company all over the world in renewables. Don't forget that green hydrogen needs green electricity, needs renewables to make real the production of hydrogen. We think that this is a global opportunity for a global business. You know, following the words that Agustín said, that the European Union has a clear view of their goals to decarbonize the industry to 2050.
In this process of decarbonization, they believe that the integration of renewable hydrogen into the energy system is a main key to achieve this goal. They believe that there are new facilities of green hydrogen production to be built, and there is an intermediate goal of 6 GW in 2024 and 40 GW of electrolyzers in 2030. This is not going to be possible, as Agustín said, due to the level of cost that right now exists on the hydrogen production if there is no support from the European Community.
Involved in this financial decarbonization that the Community has developed, there are some funds that will help to level the price of the production of green hydrogen, as you can see in the slides. Where is Iberdrola's business focus? Aligned with everything that Agustín said, we think that the first and absolutely real today use an option for green hydrogen is to replace as much gray hydrogen that right now the industry is using.
It's important to say that, as Agustín explained before, this replacement is more effective if you do that on-site close to the customer because all the transportation costs and the storage costs. We think that for this amount of gray hydrogen that is produced right now in the world, there are some niches that, I don't like to call them niches because there's a lot of hydrogen produced in the world. There are some sectors that needs an urgent decarbonization, an urgent replacement of gray hydrogen with green hydrogen.
These industries are the fertilizers, the petrochemicals, and other niches like glass producers and, for example, hydrogen fats sectors. Don't forget that gray hydrogen is responsible, the production of gray hydrogen with the methods that Agustín said, is responsible for the 2% of the CO2 emissions all over the world. What else? Being absolutely real with Agustín, we need to think that hydrogen is only going to be a solution in those places or those sectors where electricity is not possible or is not efficient.
We think, and we are seeing because of the industry's demand and need, that there are some movements around all of those transportation and mobility where electrification, as I said, is not the best option. Of course, trains, don't forget that in Europe there are more than 80,000 km of railways without electrification or trains, excuse me, ports and airports, captive fleets that they don't have time to refuel the battery. There are some niches that because of mainly the time of recharge or the long distances that they have some kind of opportunity to grow with hydrogen.
We have been seeing this in some places, like I'm going to explain you later. Later on, I'm sure that we will see some solution for maritime transport, be ammonia, could be, and planes. In the very long-term, we could see a substitution of natural gas in the production of energy or in the high-temperature industry. It's hard to believe that the costs of producing green hydrogen should level the costs of natural gas. This only should be possible if the carbon taxes rise up to EUR 150 per ton. What's our plan in figures? We think that we need to move fast, grow fast, but with small ambition.
What needs the market right now is to impulse it, to start moving and to do things. As you can see in this slide, we only have an ambitious, for us is very ambitious, but our goal is to build 600 MW of electrolyzer in 2025 with 15,000 tons per year of hydrogen and helping development of 1,000 MW of photovoltaic capacity. To be absolutely clear, our contribution to the EBITDA of the company is going to be absolutely symbolic. We are thinking of hydrogen in a long-term business, not a short-term business. I bring with me two cases.
They're not cases, in fact, they're realities because, I'm sure that you know, we have been developing since summer the first phase of Puertollano project. Puertollano is a fertilizer plant that belongs to Fertiberia. Fertiberia is the main fertilizer company in Spain. They produce in this plant in Puertollano, it's in the center of Spain, and Palos at the south of Spain. They produce ammonia for fertilizers. We together, Fertiberia and Iberdrola, made a plan for transforming this. They, of course, they use gray hydrogen for their production.
We made a plan, a long-term plan, until 2027, to transform this gray hydrogen and gray ammonia production for gray or not green fertilizers to green hydrogen, green ammonia, and green fertilizers. We made a four steps plan in their both sites, and we are going to start with a small project, but it's going to be, should be, I'm almost sure that it's going to be the biggest real project in Europe.
We're going to start 20 MW of electrolyzer in Puertollano, that has the supply of a photovoltaic dedicated plant with the support of a battery, and we are going to produce more than 1,000 tons per year of green hydrogen and also oxygen that could help to Fertiberia to produce the green ammonia. If all this plan does that, as I said at the beginning of my speech, needs, of course, the help of the administration, it's going to make Spain the first country with the 100% of the production of green ammonia.
Next real project that I would like to share with you is that we won recently, a few weeks ago, the Barcelona Metropolitan Transport tender. Barcelona is going to buy from today to 2030, up to 60 hydrogen, 60 fuel cell buses. They tender the construction and operation and supply of all the green hydrogen for the 60 buses.
We have been awarded with this tender a few weeks ago. What makes this tender is to strengthen the position of Iberdrola as a benchmark for urban electricity mobility because we are, I'm not going to say the best, but we are the best in electrical mobility. We are very competitive in hydrogen mobility, as this tender shows. That's all from my side.
Thank you.
Thank you very much for your attention, and I pass the floor to Diego.
Thank you very much, Millán. Very clear. Now, last but not least, Diego Díaz Pilas will go over the third part of our agenda. Please, Diego, the floor is yours.
Thank you. Thank you very much, Diego. Good afternoon, everyone. After Agustín has set the scene with the vision, and Millán has explained in detail our plans, I'm going to talk briefly about Iberlyzer, which is the electrolyzer company that we announced a few weeks ago and that you have probably read about. The first is why Iberdrola is actually embarking on a project like this one.
We've been talking about plans to hydrogen between 2020 and 2030, but the reality is that when we look at the number of operational projects of, let's say, Power-to-X or hydrogen or whatever you want to call that, of green hydrogen, the reality is that there are very few projects operational in the world. As Millán was describing, our 2021 20 MW project in Puertollano is going to be the largest in Europe, just next year. That gives you an idea of the type of projects that are operational today. We see less than 100 projects active today with less than 100 MW, and that gives you an average of, let's say, 1 MW per project.
There are some larger ones. In reality, what we have seen when we have analyzed the value chain is that there are strong players that are growing, but for the growth that we have foreseen, we believe that this value chain needs to be boosted, and that's one of the key reasons for us to actually start working in this area. Second reason is, both Millán and Agustín touched briefly on the ambitions of Europe to actually become a champion worldwide in relation to green hydrogen. This ambition has been made clear both at the European level and also at the Spanish level or Iberian level for Spain and Portugal.
We see a brief difference here. Europe does not only want to be a champion in green hydrogen when we talk about projects, but also when we talk about technology and industrialization. Let's say that in the past, for instance, if we take the example of PV, photovoltaics, Europe has been a champion in growth of the technology, but perhaps the continent and several countries have lagged behind other geographies in technology development and industrialization, right?
The perception here, and we believe based on all the statements that have been done at both European and Spanish levels, that this is not an error that anyone is willing to make again. We believe that in order to actually get the support that the projects need, we perceive a strong push towards the development of the value chain and the industrialization of Europe regarding hydrogen. This is the second reason why we have decided to get into this Iberlyzer project that I will give you a bit more color later in the presentation.
The third reason is related to Iberia, right? There is a rationale. You know that Iberdrola is a global company. Like Millán was explaining, our ambitions in relation to hydrogen are global. Why somehow Spain comes first? Well, one of the reasons why Spain or Iberia comes first is related to the renewable resource. We've seen in Agustín's presentation that the cost of green hydrogen is going to be, and it's already very tied to the renewable resource.
We believe that Iberia, both Spain and Portugal, are very well-suited with a great solar resource and a very good wind resource to actually be one of the most competitive areas in the world in relation to the production of green hydrogen.
In parallel to that availability of resource, there is, as we have briefly seen in the previous presentations, an ambitious and coordinated effort between both Spanish and Portuguese governments that together add to a goal of 6 GW of electrolyzers on the ground by 2030 and several hundreds on the ground by 2024, which is one of the most ambitious and short-term plans in the world. With this combined effort, which adds together more than 15% of the whole European Union target, we believe that Iberia is really on the verge of becoming a renewable hydrogen hub.
This is why we are focusing on developing electrolysis, why Europe, and specifically why Iberia. How we plan on doing that, right? We've talked briefly about the whys, and now we'd like to share with you a bit on the how are we going to do this. We've been working with technology companies for more than 10 years through our ventures program. We've been working with them to channel innovation from these emerging companies and startups towards the business of Iberdrola in the form of minority investments, in the form of piloting technologies, in the form of challenges of technologies.
We are ready now to take, and Iberlyzer is the first example in this program, we are ready now to take a step forward, which is we are detecting need for innovation in the market, like I was describing on the previous slides. We believe that we can, through PERSEO Venture Builder , which is the unit that we recently launched, we can contribute to the launch of transforming internal innovation and knowledge into new businesses, specifically in technologies that are focused on supporting electrification and technologies that are focused in decarbonizing hard-to-abate sectors.
We've touched briefly based on the whys. This is the tool that we are using, and now we're ready to give you a bit of more detail on what is Iberlyzer about, who are the shareholders, who are the partners, and what are its ambitions somehow. The mission of the company is to provide large-scale electrolyzer systems to large customers with strong hydrogen demand. As Millán was saying, Iberdrola is focusing first on decarbonizing current hydrogen production. We believe that's really helping go down in costs, and Agustín has also briefed touch base on that.
That's going to be the main focus for Iberlyzer as its mission. Two companies are forming Iberlyzer at this point. The first one is Iberdrola, and you know our plans by the previous presentation. The second one is Ingeteam. Ingeteam is an international technology group with presence in more than 20 countries, focused on power and control electronics, integration, and manufacturing of all sorts of electric machines. We believe it's the right partner to fulfill the goal and the mission that we have set for Iberlyzer. What are the resources and the main targets that we have in the company?
We have the goal of integrating more than 200 MW of electrolyzers by 2023, and we are investing all together with the partners and the different entities, more than EUR 100 million in these years and creating more than 150 direct jobs. This is somehow the mission, but we have already moved since we have created the company and beyond the current shareholding, we have reached a first agreement with Nel, one of the leading manufacturer of electrolyzers in the world, to further developing the technology value chain in Iberia, which we described was somehow one of the main goals here.
All in all, what we want is for Iberlyzer to fulfill a market need, somehow in the same way as Gamesa did in the early days of the wind industry. This is not so much for Iberdrola to become a manufacturer. This is not the goal of the company, but more so for helping boosting the value chain and for helping boosting the industrialization of the areas that we believe are needed in order to support the growth of the business, which is the main goal here and Millán has very detailed described in his presentation.
In all, that's the vision that we have for Iberlyzer, and before we wrap up and we have time for questions, since I'm speaking, I will be briefly wrapping up everything we've seen today. Regarding technology ambition, our vision from Iberdrola is that for decarbonizing, the first thing we need to do is electrify as much as possible and as many final energy use as possible. We have the technology to do so, and we need to really grow that.
There are roughly 15%, 16% of final energy demand that is going to be challenging to electrify, and we believe that hydrogen can play a very pivotal role for decarbonizing that 16%. If we want green hydrogen to be competitive, we really need to grow the number of projects. To grow the number of projects, we need to focus in whatever is demand today. As Millán was describing, this is current gray hydrogen consumption. If we focus in the short term on that, then we will be able to lower down cost so that in the midterm, we are able to, let's say, tackle those hard-to-abate sectors.
Why green hydrogen? I think that was made pretty clear by Agustín. Today is perhaps a little bit less competitive than other options, specifically with current CO2 prices and current technology cost. We foresee a very strong reduction in renewable cost to 2030 and an increased capacity factor. That's going to, along with the development of the value chain that we were describing before, that's bringing down the cost of green hydrogen so that we believe that's the clear winner. Any other investment is most likely going to become a stranded asset in the midterm.
That's why we are betting our strategy towards green hydrogen. On Iberdrola plans and summarizing Millán's presentation, we will have the largest project in Europe only one year from now. We have an ambitious plan to 2025 and beyond that has already been described. This business unit is going global. We are not focusing on Iberia or anything, although the first step for the reasons that we explained is going to be focused in Spain.
Lastly, but very importantly, in order to, let's say, commit and get the business to develop at the pace that it needs, we are fully committed with the development of the value chain. That's why we have launched the Iberlyzer project that we have briefly described. With this, I have finished my presentation. Thank you very much.
Well, thank you very much, Diego. Now I think that we can just open the Q&A session. Please, operator, first question.
Thank you. The first question comes from Harry Wyper from Bank of America. Please go ahead.
Hi. Good afternoon, everyone, and thanks very much for the presentation. I'll obviously keep myself to two questions. Firstly, on cost, I think you mentioned on, I think it was slide 23, that you'd need CO2 prices to go to about EUR 150 a ton in order to make green hydrogen viable for some of the usage cases. I wondered, have you done any analysis on what that would actually mean for the cost to the end user? What I'm trying to get a measure for here is, if you are a train company or an ammonia producer or a steel maker, how expensive is it going to be to convert your operations to hydrogen?
What ultimately is that going to mean for the prices of these products in the end market, just to get a sense of the viability of passing on some of the cost of this to end consumers who buy steel and train tickets and so on? That's the first one. The second one, just on the scale here, I thought it was interesting you mentioned on slide seven that it's going to be 3,000 TW hours of output needed just to convert the current hydrogen consumption by industry. I think that's roughly equivalent to the entire power consumption of Europe.
This is just the early steps, right, in the sort of stages of hydrogen. I guess we get a lot of debate from investors about, oh, is there too much competition in renewables and big oil going to come in and crash returns? I was wondering, could it actually be the other way around? Is it really technically and physically feasible to build enough renewables to actually produce this much power? I'd be interested to know if you've done that analysis at a European or global level, and is it really feasible to make this much renewable capacity to produce all this hydrogen in a sort of reasonable time frame? Thank you.
Okay, thank you for the questions. Well, starting from the end. I think that we have enough renewable resources in Europe and worldwide to produce as much electricity and power as needed. I don't think there is a lack of resources and there isn't a limitation on resources. There could be limitations in specific places or locations, like it could be perhaps U.K. or some specific places. I don't think there is a limit for the renewable expansion, right? As I said, worldwide, there is more than enough renewable resources.
It's true that this 3,000 TW-hour, that it's this 10% or even more than 10% of the electricity consumption today, is a huge amount and that's why we see this as a big opportunity for the renewable industry and the utility industry as a global to increase our demand and to be able to provide that. No concerns about the capacity of the industry and the renewable resources to provide that hydrogen. Also regarding the question about the cost of CO2 and the competitiveness of hydrogen, green hydrogen and so forth.
While it's true that CO2 cost will help very much the competitiveness of green hydrogen production. Our estimation, it is that every EUR 10 per tons of CO2 will add a cost of around EUR 0.1 per kilogram of hydrogen. With these variables, you can make the calculations and the truth is that there are some sectors that will arrive to this competitiveness before others. For example, those industries that are using compressed hydrogen, they will arrive to the competitiveness before because of the cost of transportation.
Those industries like refineries and fertilizers, ammonia producers, as Millán was mentioning before, they will need a lot of support at the very beginning and then they will struggle to get competitiveness at the end of the decade. We think it could be somehow achieved. Those uses that you were mentioning before, like steel or cement or these high temperature industries and so on. This is going to be difficult and probably some kind of regulations will help very much on this competitiveness.
I think that we are in a very exciting decade in which technology will help us to achieve a feasible and technological achievable solution. Then probably we'll be able to make the cost through regulations, through CO2 cost, through decreased cost of the technology and so on. We will try to make and probably will make this technology competitive.
Thank you very much, Agustín. Operator, next question, please.
The next question comes from James Brand from Deutsche Bank. Please go ahead.
Hello. Thank you for the presentation. It's really interesting. I have primarily questions just trying to understand a little bit better the conclusions you have come to around residential heating and some of the estimates for costs that you've put out on slide 18. I'm just trying to understand a little bit better what's going into your hydrogen future best cost estimates. In particular, you made some comments that you saw hydrogen as being very inefficient compared to natural gas. You have included your efficiency estimates, so you gas condensing boiler being pretty close to 100%.
I was wondering what efficiency estimate you were using there for hydrogen, as a particular point, and then if you're able to describe more broadly what assumptions have gone into that future best scenario in terms of maybe electrolyzer cost or overall hydrogen cost to dollars or euros a kilogram. I was also wondering whether that slide included an estimate for carbon pricing.
I guess that's quite a few questions, but particularly the efficiency point I'd be interested in your view. There was also a comment later on around huge potential storage costs if you wanted to store hydrogen. Was it 14,000 salt caverns and EUR 637 billion investment? Is that global number or European number? I was kind of curious, it sounds huge in terms of the numbers, why it's so much bigger in terms of capacity than we have in the current gas storage networks.
Finally, I was interested, we can circle back to residential heating. If you don't think that hydrogen is going to be a technology for residential heating, what technology do you think we'll be using, biomethane to supplement electric heat pumps? Don't think many people think that electric heat pumps are going to be enough on their own to be able to deal with the peaks. Thank you very much.
Thank you. Thank you for the question. I think the residential heating one is a very interesting question. I will start by elaborating a bit more on the hypothesis somehow as per your question that are behind the slide 18. Regarding the efficiency, hydrogen efficiency for heating is the same as roughly as natural gas efficiency for heating. We are talking about 100%. We are not, let's say, penalizing, if you want to call it, or we are not saying that hydrogen is going to have a worse efficiency than natural gas for heating. The main difference, in terms of hypothesis, is related with the difference of efficiency versus electricity.
Where you are talking about residential electricity with a heat pump, you see efficiencies on a seasonal basis above 300%, and that's why the OPEX of heat pumps is really way lower than that of hydrogen today and in the future. Additionally to this slide, this is not factoring in any upgrade costs that would be required in the gas grid in order to carry hydrogen. We are only factoring in this hydrogen today figure, we are factoring in, let's say, the wholesale cost of hydrogen plus, the actual or the spread today between wholesale and retail for natural gas. That's only today.
On the future best, we are being, let's say, aggressive in the cost reduction for producing hydrogen, in the estimations based on the cost reductions that we see for green hydrogen and adding only that, let's say, spread between wholesale and retail, the same as we are doing in the today case. We believe that all in all, these numbers are conservative in relation to electricity and very positive in relation to hydrogen. Even with those hypotheses, we believe that in order to cover the residential heating demand, the winner technology is the heat pumps.
Additionally, to, let's say, additional technologies, we don't see that other technologies like biomethane in terms of the available resource can play a role here. We are talking about huge amounts of energy, and we believe that the technology that is best suited is heat pumps. Specifically, we are talking about cold climates.
There will be some times in which heat pumps will be less efficiency, but overall, in colder climates, you use the heat pump long, and since the OpEx is the main advantage, we see that they are even more competitive. Lastly, to the question on storage, and I think that was just a comment, it's at 20% of global hydrogen current production. That's the figure where it's coming from.
Okay. Thank you very much, Diego. Operator, please, next question.
Thank you. The next question comes from Javier Suárez from Mediobanca. Please go ahead.
Many thanks all for the presentation from me as well. It has been very interesting. Two or three questions. The first one is a follow-up from one of the previous question on the relative competitiveness of hydrogen versus natural gas down the road. This mentioned to EUR 150 per ton of CO2 as the swing factor . I was wondering to what price for natural gas you are comparing?
Hydrogen too, because our calculation is that that swing factor could be at a lower level. I would be interested in that comparison, what you are assuming now as cost for natural gas and also what you are assuming for the CapEx to build the electrolyzer, the levelized cost of energy and so on and so forth. Again, it looks to me EUR 150 per ton, too high as a price for that swing to happen. That is the first question.
The second question is on the electrolyzer itself. You have made interesting comments on the different technologies available, alkaline versus PEM. You can help us to understand what is in Iberdrola's view, the technology that is likely to be the winner or the difference in utilization between both technologies. That would be very, very helpful as well.
The third question is on the structure of the market itself. The question would be in the hydrogen value chain, where do you think Iberdrola should position itself? It should be a company providing with renewable energy electricity to the electrolyzer or it's a company that is also going to invest through the whole value chain and is going to deal with the final commodity and therefore is going to make use of the electrolyzers to produce a new commodity called hydrogen that is going to be commercialized in a liberalized market. Many thanks.
Javier, I'm going to answer to your first question. If we say that we would need EUR 150 per ton of CO2 taxes, is because we made this exercise with a real client that we are trying to do some test. Of course, it's a pilot, it's not a big scale. Even with a pilot, even with a small amount of hydrogen injected directly into their engines to produce electricity, we are not going to achieve that break-even point if we don't get this level of carbon tax. I'm sorry to be so pessimistic, but that's the figure that we get.
Well, regarding the question about the technologies of the electrolyzers, we think that for now on, both technologies are going to live together. We will see we will wait to see if there is any clear winner. As I said, alkaline electrolyzers are today cheaper, are today best suited for steady production and a steady flow of hydrogen. For industries that need this steady flow of hydrogen, probably alkaline would provide a better performance on price balance.
For sure, you need to provide electricity to the electrolyzer for these steady hours, this is a challenge that we are facing with our mix of supply of green electricity that we can provide to electrolyzers. Alkalines for those industries needing this steady flow of hydrogen. For those industries that have somehow requirements on a smaller footprint or requirements on needs for higher and lower production of hydrogen, depending on the renewable source and so on, a proton exchange membrane would be best suited.
We evaluate in our projects both technologies and choose any or other. For the future, the perspective. Well, we have seen very cheap prices, at least nominally, in alkaline electrolyzers today. We have seen a very steep decline on cost of PEM electrolyzers and with very good perspectives. We remain open to both of them, and in the presentation that Diego mentioned about the electrolyzer and how we are going to manufacture electrolyzers and so on, or we are going to help the promotion of a company that is going to manufacture electrolyzers.
We will be open to both technologies because we think both of them will be well suited for different applications. Last question was about where Iberdrola think it could be positioned itself in the whole value chain. For sure, I can assure you that we want to provide green electricity to the electrolysis system, but we also want to install and operate electrolysis system and being producer of the commodity, of the hydrogen commodity to final consumers.
I think it is clear our goal of adding hydrogen to the portfolio of products or commodities that we are selling. Beside, to help to develop the supply chain, we have set up this venture of Iberlyzer that somehow will help to develop this supply chain and the offer of electrolyzer systems that will be available for our projects.
Well, thank you very much to the three of you. The next question, please operator.
The next question comes from Arthur Sitbon from Morgan Stanley. Please go ahead.
Yes. Thank you for taking my question. The first one is, you mentioned the difficulties to make green hydrogen a viable option for heating, especially due to the investment required in the gas grid. I was wondering, in that case, how do you think the question of interseasonal storage will be addressed in a fully electrified model, especially for heating? That's my first question.
The second one is, we've seen quite ambitious targets at the European level for the green hydrogen industry. I was wondering, in your view, what are, at the moment, at this stage, the main bottlenecks to achieve those ambitions? Thank you.
First question about heating. We have to bear in mind that, for sure, if we want electricity to become the main energy carrier for heating, location matters, and different countries will have different requirements. If we look at countries like Spain, France, Italy, and most of the countries where people worldwide live, we think that heat pumps can cover a very high percentage of the heating needs. Right? I think we have the opportunity to really decarbonize a sector that was before very hard-to-abate, and now we have the technology to do so.
It's true that for some countries like, it could be U.K., it could be Norway, it could be some others, maybe you need to have an additional source of energy for those very cold winters in which maybe your electricity network is not going to be able to supply you with energy. For that, to think that for those specific situations or those specific climate conditions and so on, you are going to build a whole hydrogen infrastructure because of that, with the losses of efficiency that you have, I think it's very premature.
I would say, as many countries are doing, I would go to the easy, to the low-hanging fruit, that it is to trying to electrify as much as possible and to remove as much as possible fossil fuels for our heating system. With those, let's say hard-to-abate or hard to electrify locations and systems, then we will figure out what solutions can be done. Truly speaking, I think we have the opportunity to remove, with cheap energy, renewable electricity, most of the heating needs, residential ones, worldwide today.
Regarding the bottlenecks, which is a fair question when one sees, let's say, ambitions like the 40 GW electrolyzers. The first bottleneck somehow to reach that level is demand. Right now, and that's the main reason why we are focusing on existing demand, because existing demand is the only large enough volume of demand that can allow to reach those targets and at the same time removing CO2 emissions. The first bottleneck that I would probably refer to is demand, because future demand only fits 15% of final energy demand is huge, but it's not there yet.
The only demand that is there yet is the current industrial feedstock demand, and that's why we are focusing on that one. That will be kind of the first, let's say, bottleneck. The second one is to serve that demand that is there. There is a breach that needs to be made in terms of competitiveness, and both Agustín and Millán briefly touched base on that. Like, okay, we have that demand, that is the one that is large enough, so that we need to focus on it. Still, green hydrogen needs some support to actually be competitive with gray hydrogen in the short term.
Probably competitiveness is the second bottleneck. In parallel, regulation is probably the third one, so that if we want to tackle that existing demand, that support needs to be also in the form of better regulation and the same for the mid and long term for the hard-to-abate sectors. That green hydrogen is a more competitive solution, and that's why we've been discussing during the presentation, CO2 prices and so on. Probably the last one is also the last part of our presentation, which is the value chain.
We need the value chain to grow quickly enough from 100 MW operational projects in 2020 to 40 GW only in Europe, operational by 2030. That's, let's say, a huge challenge in terms of the value chain, and that's why from Iberdrola, we are pushing in that specific area. To sum up, I would say demand. We need demand, and the only one that is there today is existing demand.
We need a boost of competitiveness in the form of support for green hydrogen to serve that demand. The same for the future demand. In parallel, we need to further develop the value chain so that we are able to make these, let's say, two orders of magnitude growth in terms of what the industry is able to serve.
Another thank you from my side on behalf of the audience. Please, operator, next question.
Thank you. The next question comes from Elchin Mammadov from Bloomberg Intelligence. Please go ahead.
Hi there. I have two questions, please. My first question is on the competition. Utilities are, and pure play developers of wind and solar are the main owners and operators of these assets today. There are also infra funds and oil and gas companies that are entering the space. Who do you see to be the main owners and operators of the hydrogen production facilities come 2030? Is it going to be utilities, oil companies?
As a part of that question, do you see oil companies as partners for you or as competitors for you? We've seen a lot of projects where they actually partner up with utilities on some hydrogen clusters, wanted to hear your view. The second question is on your hydrogen business overall. I remember you IPO'd and then later on delisted Iberdrola Renovables. Are you considering a similar thing for your hydrogen business, given that it's not going to contribute to EBITDA anytime soon? Thank you.
Okay. As we said through the presentation, we hope to become a hydrogen supplier for the industry, for the other uses of hydrogen in the future. We want to own electrolyzer assets. I think that we will have. We have today one or two of the keys for competitiveness of this hydrogen. First, it is to have access to a wide portfolio of cheap renewables. Second, I think, to have the possibility to mix our electricity supplies to provide high load factors for the electrolyzer systems. I think a company like Iberdrola will have one of the best positions to have green hydrogen, competitive green hydrogen.
The answer to the question is yes, we will own the assets. We will have some competitors for sure. We think we will be very competitive in this regard. Second question, about an IPO of the business or something. I think it's very premature. We have just launched this unit this year. I will leave the floor to Millán if he wants to explain further.
Absolutely agree with you, Agustín. It's too premature. Right now, we are in the moment to move this business, to start the business, to make things happen, and we will have time to think about profitability.
Thank you very much.
Thank you. Please, operator, next question.
The next question comes from Jorge Guimarães from JB Capital. Please go ahead.
Hi, good afternoon. Thank you for the presentation and for taking my question. Firstly, take a step back, on the electrolyzers themselves. As of today, for each kilogram of hydrogen, how many megawatt hours of electricity are needed? What is effectively the conversion ratios? How do you expect it to evolve until 2030? The second one would be, what is the lifetime of an electrolyzer? Is it comparable to a solar panel or at, let's say, in 10 years' time, one needs to replace the electrolyzer and spend the CapEx again? Thank you very much.
Okay, thank you very much for your question. There's a thumb rule that it's easy to remember, that you need 60 megawatt-hours of electricity to produce 1 ton of hydrogen. That's the common figure right now. I think, I presume, and I'm sure that Alejandro, not Alejandro, Agustín will know better than me that there's some kind of improvement in this area. As today, 60 megawatt-hours per ton. Your second question is how long do the electrolyzers exist?
The bottleneck of an electrolyzer is the stack. The stack is something that you can change during the whole life of the electrolyzer. We are thinking, and we have been buying electrolyzers with 25 years of lifetime, but I'm sure that giving them the right maintenance and changing the stacks, it will last as much as they will be competitive.
Thank you very much.
Thank you very much, Millán. I think that we're going for the last question, operator.
Thank you. The next question comes from Miguel Medina from KC Capital. Please go ahead.
[Non-English content] Just one question on the Puertollano project. Who's going to cover the cost differential between the gray hydrogen that Fertiberia is currently using and the green hydrogen? If that's state funding or EU funding, is that subject to some sort of a state aid test? Thank you very much.
This to the Innovation Fund, we hope that this project should be awarded with the funds. Of the rest of the steps, we need to have some kind of that level, the price of the green hydrogen with gray hydrogen. That's true. If we don't get that funds or that help that we need to levelize the price, the project should be very hard to realize. Thank you very much.
Thank you, Millán, this was the last question of today's session. Thank you so much to Agustín, to Millán, they both have to rush, to Diego as well, for their time today. Thank you, all of you, for attending to this session. Before saying goodbye, just we would like you to wish you a merry Christmas. Please stay safe, we really hope to see you all in 2021. Bye now.