The future of green hydrogen in Tenerife does not depend solely on having land, funding or the technology to produce it. The condition that will determine its viability is knowing who is willing to buy it and securing that demand before sizing the facilities. Without assured consumers for a sufficient period, a plant risks being oversized, underused or economically unviable.
Demand drives every decision
Demand conditions virtually every subsequent decision. The expected sales volume will determine the size of the electrolysers, storage capacity, compression systems, distribution logistics and, ultimately, the investment. For this reason, identifying potential consumers is not enough: it is necessary to know which ones are genuinely prepared to purchase the hydrogen and back that intention with contractual commitments.
Professor of Applied Physics and head of the University of La Laguna’s (ULL) participation in the Green Hysland project, Ricardo Guerrero Lemus, identifies this as the main challenge for Tenerife. The university has been working since 2021 on adapting to the island the model developed by this European project in Mallorca, where a complete chain of renewable hydrogen production, distribution and consumption is being tested.
Lessons from Mallorca
The Mallorcan experience includes applications in transport, tourism, industry, energy generation and the injection of hydrogen into the gas grid. But transferring that model to Tenerife does not mean copying its facilities. Each island must define its own consumers, renewable sources, storage needs and transport conditions. In Tenerife, the first step is to build a market capable of sustaining production.
Potential buyers include transport companies, industries, hotels, port operators and producers of synthetic fuels. Public procurement could also help create initial demand through bus fleets, municipal vehicles or public installations. Administrations could finance projects, become consumers themselves, or drive public purchasing of hydrogen.
Public funding raises the bar
The involvement of public funds also requires greater rigour in justifying demand, social utility, costs and return on investment. If a facility is financed exclusively with private capital, its size will depend on the company’s investment capacity and the risk it is willing to assume. With public resources, knowing in advance who will consume the product becomes even more relevant.
Securing buyers matters because renewable hydrogen remains an expensive technology. Electrolysers, compressors, storage tanks and fuel cells have not yet reached the levels of mass manufacturing and standardisation achieved by other technologies. This pushes up the cost of installations and makes it difficult to compete with fossil fuels or with direct electrification where that is possible. The European strategy aims to accelerate industrial manufacturing and progressively reduce equipment costs.
A European reference project
Green Hysland began with an initial investment of nearly 50 million euros and funding from Horizon 2020 to demonstrate the hydrogen value chain on an island territory. The Mallorca experience is being studied as a reference for Tenerife and other European islands.
The ULL has analysed for Tenerife the integration of electrolysers into island grids, production and compression needs, and the possibility of using hydrogen to take advantage of surplus renewable energy and provide services to the electricity system. There have also been contacts with energy companies such as DISA, which is promoting a project in the Granadilla Industrial Estate to prepare land for future energy transition infrastructure.
Territory and scale
But having land or technical capacity does not answer the decisive question. Before building a plant, it is necessary to determine how much hydrogen Tenerife can realistically absorb, which sectors would use it, for how long they would be willing to buy it, and at what price. Demand must dictate the scale of the infrastructure, not the other way round.
The territorial dimension adds to the economic equation. Tenerife will need to decide how far to commit to large centralised plants or whether to also allow production close to points of consumption. Large installations concentrate investment and enable greater volumes, but they require transporting the hydrogen afterwards by lorry, hydrogen pipelines or dedicated networks, with the associated costs and impacts.
The market decides
The challenge does not begin with building a plant, but with securing buyers. Demand will determine capacity, investment and distribution. Committing consumption in advance is the necessary condition for green hydrogen to be viable in Tenerife. Ultimately, the market will decide the scale of the project.
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