Italy Invests in Green Hydrogen
In July 2020 the European Commission released a new strategy for hydrogen, with a particular focus on “green” hydrogen, which can be obtained by water electrolysis, with renewable energy sources powering the electrolyzing process. Green hydrogen will help eliminate the use of fossil fuels in heavy industries and transportation (ships, trucks, aircraft), and will also help develop seasonal energy storage systems (because hydrogen can be stored in great quantities and then converted back into electricity). A few key private and public stakeholders in Italy are investing heavily in green hydrogen and opportunities may exist for U.S. companies providing related technologies such as technologies for water electrolysis plants and/or renewable technologies that can power those plants. This document presents a brief overview of the current state of green hydrogen production and planned investments in Italy.
National Hydrogen Strategy
In 2020 Italy launched a national hydrogen strategy to help decarbonize the economy in order to meet European climate targets. In a draft document, which was open for public consultation by all relevant stakeholders from November 24 to December 21, 2020, the Ministry of Economic Development said it was targeting investments in the sector of around 10 billion euros ($12 billion) to 2030, with half of the amount coming from European funds and private investments. The Government’s plan to help boost production of green hydrogen, as stated in the draft document, is to introduce about 5 gigawatts of electrolyzing capacity to extract the gas from water over the 2021- 2030 period. The document also stated that by 2030, hydrogen could make up 2% of Italy’s final energy demand and could help eliminate up to 8 million tons of CO2, with a 20% energy demand coverage possible by 2050. The document also stated that the plans could create more than 200,000 jobs and generate up to €27 billion for Italy’s gross domestic product, with hydrogen to be used in transportation, heavy industry and natural gas pipelines. It should also be noted that a recent study highlighted the potential for Italy to become a clean energy hub for Europe by importing hydrogen produced in North Africa from solar power at a cost 10-15% lower than the one produced in Europe.
Investments in Green Hydrogen by private stakeholders
Italian gas group SNAM has been experimenting with a 10% mix of hydrogen as part of its natural gas network and about 50% of the investments planned in SNAM’s 2020-2024 program are dedicated to making its infrastructure “hydrogen-ready”. SNAM is part of a new initiative, called “Green Hydrogen Catapult”, together with a few industrial leaders in green hydrogen, including ACWA Power, CWP Renewables, Envision, Iberdrola, Ørsted and Yara. The objective of the initiative is to stimulate the development of 25 gigawatts of green hydrogen production capacity by 2026 and to cut the current costs in half, bringing them below $2 per kg. SNAM recently signed an agreement for the acquisition of around 33% of the shares in Italy-based Industrie De Nora, a leader in the production of electrodes for electrochemical industrial applications. SNAM has also invested €33 million in ITM Power, one of the major global manufacturers of electrolyzers. Finally, SNAM is offering the German government, through its own infrastructure, the possibility of making Italy a green hydrogen hub for Europe. In the words of SNAM’s CEO Marco Alverà, “By 2050 green hydrogen imports to Germany through Italy will cost around $1 per kg and will be cheaper than the hydrogen produced locally from offshore wind farms or transported via sea from the Middle East.”
Italy-based global utility Enel plans to integrate electrolyzers in renewable energy facilities in order to produce and sell green hydrogen to industrial clients, increasing its green hydrogen capacity to over 2GW in 2030. It struck an agreement with oil and gas giant ENI on hydrogen. The plan is to supply hydrogen to Eni refineries. In a joint note it was announced that the two groups “are working together to develop green hydrogen projects through electrolyzers powered by renewable energy”. The plants will be located near two Eni refineries, where green hydrogen may represent the best decarbonizing option. Each of the two pilot projects will include an electrolyzer of about 10 Megawatts and it is expected that both will start to generate green hydrogen by 2022-2023. ENI is currently the largest producer and user of hydrogen in Italy (330 thousand tons out of 480 thousand), which is utilized in its refineries.
Italian companies Enel Green Power (Egp) and Maire Tecnimont, respectively world leaders in the renewable energy sector and in energy and chemical technologies, also recently struck an alliance. The two companies have created a collaboration that will take them to the United States, where they plan to build plants for hydrogen production without CO2 emissions. Maire Tecnimont, through its subsidiary NextChem, brings its experience in plant engineering gained around the world, while Enel Green Power offers its renewable energy plants, especially wind power, which it has developed in the United States. The project under study between Enel Green Power and Maire Tecnimont should be operational as early as 2023. The plant will use renewable energy generated by one of Egp’s solar plants in the United States to produce green hydrogen to meet the energy demand of a biorefinery.
The U.S. Commercial Service office in Milan (CS Milan) can provide more information and assistance to U.S. providers of green hydrogen technologies, such as water electrolysis plants and/or renewable technologies that can be used to power those plants, who are wishing to explore opportunities in the Italian market or with Italian companies active globally.
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