MILAN – Italy plans to raise up to 1.5 billion euros ($1.79 billion) to build a 1 gigawatt-per-year electrolyser factory as part of plans to become a European green hydrogen hub, internal documents and sources said.
Hydrogen is gaining traction as a form of energy as the European Union seeks to combine recovery from the impact of COVID-19 with an accelerated shift to green fuel.
The government of Mario Draghi, which has put climate change at the heart of its agenda, has earmarked up to 450 million euros of public money in its Recovery Fund plan sent to Brussels in April to help fund the electrolyser.
It is planning to talk to private investors for matching funds. A senior ministerial source, speaking on condition of anonymity, said Rome was confident private investors could take the total to between 1.1 and 1.5 billion euros.
Hydrogen, which accounts for around 1% of energy consumption in Italy, is mostly produced from fossil fuels, mainly natural gas.
The goal is to shift to electrolysis using renewable energy to extract hydrogen from water in a carbon-free process, which is much more expensive.
That means scale is crucial and the source said Italy would favour a single site to allow that, though no decision had been taken.
The facility, which will take four years to build, will be built on a disused industrial site or sites, preferably still connected to the grid.
A second source, who also requested anonymity, said Rome would bring on board a series of private investors in a large public-private partnership, possibly including top gas groups Snam (SRG.MI) and Italgas (IG.MI) that are building their own hydrogen businesses.
Draghi’s government is seeking to accelerate the installation of around 70 gigawatts (GW) of new renewable energy capacity by 2030 and wants some of that to be used to develop a green hydrogen industry to provide power for hard-to-abate sectors, such as steel and refining, in Italy and beyond.
The EU Commission, which aims to have 40 gigawatts of electrolysis capacity installed by 2030, says with more production the cost of electrolysers will halve by 2030 and in 2040 green hydrogen will be competitive.
Other countries are also seeking to position themselves in the vanguard. Germany’s 9 billion-euro hydrogen strategy launched last summer included 2 billion for planned import infrastructure and markets.