Spanish power company IberdrolaH2 Green Steel in Sweden and Sweden are to collaborate and build a significant facility to produce green hydrogen. It is another example of companies taking an active interest in this highly-publicized sector.

On Thursday, they announced the $2.3 billion ($2.6 billion) project that would create a green hydrogen plant with a capacity of 1 gigawatt. The financing will be a mix of equity, public and green project funding.

There are many ways to produce hydrogen, which can be used in numerous industries and has multiple applications.

Electrolysis is a method that uses an electric current to split water into hydrogen and oxygen. Some call this green electricity or renewable hydrogen, if it comes from renewable energy sources such as solar or wind.

It is expected that approximately 2,000,000 tons of DRI (direct reduced iron) will be generated each year from green hydrogen produced by the Iberdrola or H2 Green Steel developments. This can be then used for steel production.

The project’s scale is 1 GW. According to the International Energy Agency (IAEA), global electrolyzer installed capacity was just 0.3 GW by 2020.

The development by Iberdrola and H2 Green Steel will be situated on the Iberian Peninsula — no specific location has been announced yet — and is slated to commence production in 2025 or 2026.

They will also co-own the electrolyzer and manage it together. Iberdrola provides renewable energy for the site. H2 Green Steel will own and operate DRI production as well as downstream steel processing.

According to the businesses, they also said that they were looking at the “possibility of co-locating a Green Steel manufacturing facility that can produce 2.5-5,000,000 tons of Green flatsteel annually.

Aitor Moso (Iberdrola’s liberalized director of business) stated that green hydrogen was “a crucial technology in decarbonizing heavy industrial processes like the production of steel.”

Moso explained that H2 Green Steel is planning a project to “speed up the commercialization larger, more complex electrolyzers and make green hydrogen more competitive.”

It is difficult to reduce the impact of industrial intensive processes on the environment.

According to the IEA, “the iron and steel sectors ranks first among heavy industries when it comes CO2 emissions” and is second when it involves energy consumption. Each year, the sector produces 2.6 gigatonnes in carbon dioxide.

It states that the steel industry is currently the biggest industrial user of coal and provides approximately 75% of its energy needs.

In November, for example, Australia-headquartered Fortescue Future Industries said it would become the U.K.’s largest supplier of green hydrogenAfter signing a memorandum with Ryze Hydrogen and JCB, the two companies entered into an agreement.

It was also announced in the same month that Norsk Hydro, an oil giant, would merge. ShellWe would be interested in the possibility of joint projects focused on green hydrogen production.

There are many hurdles that must be overcome, despite the excitement surrounding green hydrogen.

Oct. saw the appointment of CEO Siemens EnergyCNBC spoke with him to discuss the challenges facing the industry. there was “no commercial case” for it at this moment in time.

Christian Bruch highlighted several issues that need to be addressed in order to see green hydrogen gain momentum during comments made at CNBC’s Sustainable Future Forum.

Bruch said to CNBC’s Steve Sedgwick, “We have to set boundaries that make this technology and these case commercially feasible.” We need cheap electricity, and abundant, renewable energy to make this happen. He argued that this was still not the case.

In July 2007, a few months before, EnelFrancesco Starace CEO said it was “no competition for capital between hydrogen and renewables.”

“Hydrogen today is a niche, and it is a niche that needs to develop into commercial standard and into … big industry, competitive pricing,” Starace said, signaling that such a shift would probably take 10 years.