Spanish energy company Moeve has begun construction of its more than €1 billion Onuba green hydrogen project in southern Spain, as volatile global energy markets and high natural gas prices improve the economics of renewable hydrogen. The company officially broke ground on the project in Palos de la Frontera, Huelva, on September 17, 2026, describing it as the first phase of a much larger development that is expected to eventually reach 2 gigawatts of electrolysis capacity.
Moeve approved the Onuba project in March 2026, committing more than €1 billion ($1.15 billion) to the first phase, including more than €300 million in European Union subsidies. The initial facility will have 300 megawatts of electrolysis capacity, with the broader Andalusian Green Hydrogen Valley planned to expand substantially beyond that first stage. Moeve holds a 51% stake, while France's Hy24 and Spain's public-private financial institution COFIDES are among the investors involved in the project.
The project is moving forward at a time when the energy market has changed significantly. Moeve CEO Maarten Wetselaar told Reuters that green hydrogen is currently competitive with grey hydrogen because natural gas prices are high. Grey hydrogen is produced from natural gas, while green hydrogen is produced using renewable electricity to split water into hydrogen and oxygen. The relative cost of the two production methods has been one of the biggest factors determining whether green hydrogen projects can attract investment and customers.
Green hydrogen projects have faced significant difficulties globally because renewable hydrogen has generally been more expensive than hydrogen produced from natural gas. Developers have struggled to secure long-term customers willing to pay a premium for lower-carbon hydrogen, while the cost of renewable electricity, electrolysers and supporting infrastructure has affected project economics. The sharp changes in global energy markets have altered that calculation in some cases, particularly where high natural gas prices raise the cost of conventional hydrogen production.
Moeve's decision also reflects a broader shift in how European companies view energy security. The disruption of global energy markets has increased interest in producing energy and industrial fuels within Europe, particularly from renewable resources that are less exposed to international fossil fuel supply disruptions. Wetselaar said interest in green molecules generally, and green hydrogen specifically, has increased. The company sees the changing market environment as strengthening the case for renewable hydrogen produced in Europe.
The Onuba project is part of Moeve's broader transformation away from its traditional oil business. The company, formerly known as Cepsa, changed its name to Moeve in 2024 as it shifted its strategy toward lower-carbon businesses. The company is owned by Abu Dhabi investment fund Mubadala and U.S. private equity firm Carlyle Group and is pursuing an €8 billion transformation plan focused on areas including renewable hydrogen, biofuels and other energy-transition activities.
Moeve is also developing a biofuel facility in Spain that is expected to begin production in 2027. With that project included, the company said total investment in its current developments has reached about €2.4 billion. The combination of renewable hydrogen and biofuels reflects Moeve's effort to move into lower-carbon fuels while retaining a significant presence in the wider energy market.
The first phase of the Andalusian Green Hydrogen Valley is also expected to have a significant economic impact in the surrounding region. Moeve said the Onuba project is expected to generate more than 8,000 direct, indirect and induced jobs across its development, construction and commissioning phases. It is also expected to support hundreds of local small businesses and self-employed workers involved in the wider value chain.
The project's initial 300 MW electrolysis facility will be located at Moeve's Energy Park in Palos de la Frontera, in Huelva province. The company says the first phase includes associated infrastructure and a dedicated photovoltaic plant for self-consumption. It also has the option to add another 105 MW of electrolysis capacity to the initial phase. (moeveglobal.com
The larger Andalusian Green Hydrogen Valley is intended to develop a significant renewable hydrogen production hub in southern Spain. Its location is important because Huelva already has substantial industrial and energy infrastructure, creating opportunities for hydrogen to be integrated into existing industrial operations and potentially supplied to other users as the market develops.
The project's economics will nevertheless remain sensitive to energy prices. The current advantage created by high natural gas prices could change if fossil fuel prices fall substantially. That means long-term competitiveness for green hydrogen will depend on more than temporary market volatility. Production costs, renewable power availability, electrolyser efficiency, infrastructure, subsidies and the willingness of industrial customers to sign long-term contracts will all influence whether the sector can maintain momentum.
Moeve is also reducing its exposure to traditional oil production. Since 2022, the company has sold most of its oil production assets, including operations in Abu Dhabi and South America. Wetselaar told Reuters that Moeve's remaining assets in Algeria are expected to be sold before 2030, although he did not provide further details.
The company is simultaneously discussing a possible combination of its refining, chemicals and fuel-retailing businesses with Portugal's Galp. Moeve and Galp have been in talks since January, and Wetselaar said he expects an agreement by the end of 2026 and is confident the transaction would receive the necessary approvals. The potential deal could reshape parts of the Iberian energy market while Moeve continues shifting capital toward lower-carbon businesses.
The Onuba project therefore comes at an important point for Europe's green hydrogen industry. Several projects that appeared financially difficult when gas prices were lower have faced delays or cancellations, while the recent energy-market disruption has changed the competitive landscape. Moeve's decision to proceed shows how quickly the economics of green hydrogen can change when conventional energy becomes more expensive and energy security becomes a greater priority.
Whether that improvement lasts will depend on the evolution of natural gas prices and the ability of renewable hydrogen producers to reduce their own costs. For now, however, Moeve is moving ahead with a €1 billion first phase that could become part of a 2 GW hydrogen production system in southern Spain. The project provides another indication that Europe's energy transition is increasingly being shaped by both climate objectives and the need for greater energy security.