Fifteen-year contracts will support renewable hydrogen for industry and transport as Italy targets up to 200,000 tonnes of subsidised production annually

 

• Italy is preparing competitive hydrogen auctions with an annual support budget of up to €400 million [US$462 million], covering both RFNBO green hydrogen and renewable hydrogen produced from biogenic sources.
• The first round is expected to procure around 20,000 tonnes of RFNBO hydrogen and 1,300 tonnes of bio-hydrogen, with successful projects receiving 15-year two-way Contracts for Difference.

 

ROME  -- Italy is preparing to launch a new national hydrogen subsidy programme later this year, putting as much as €400 million [US$462 million] annually behind renewable and biogenic hydrogen production.

 

The scheme, administered by the Ministry of Environment and Energy Security through GSE, will use competitive auctions at least once every six months through 2029.

 

The European Commission approved the programme in March under EU state-aid rules. Italy estimates that the 15-year support commitments could ultimately cost around €6 billion [US$6.93 billion] over their full duration.

 

Three Separate Hydrogen Auctions

Each bidding round will initially contain three categories:

• RFNBO hydrogen projects with electrolysers of 10MW or less
• RFNBO projects above 10MW
• Bio-hydrogen projects using renewable biological feedstocks.

 

The maximum starting strike prices are €13/kg for smaller RFNBO projects, €11/kg for larger projects and €10/kg for bio-hydrogen.

 

Developers will compete by offering discounts against those ceilings, meaning projects requiring less support will rank more strongly.

 

“This mechanism will support the most efficient investments,” Environment and Energy Security Minister Gilberto Pichetto said.

 

First Auction Targets 21,300 Tonnes

 

Italy expects the first competitive process to cover approximately 20,000 tonnes of RFNBO hydrogen, split evenly between projects above and below 10MW, plus around 1,300 tonnes of bio-hydrogen.

 

Over the longer term, the scheme has been designed around procurement of as much as 200,000 tonnes of renewable hydrogen annually.

 

That figure is an overall programme target rather than production already contracted. Actual volumes will depend on auction prices, project availability and competition.

 

Eligible hydrogen must ultimately be consumed in industrial applications or transport. RFNBO hydrogen must achieve at least a 70% lifecycle greenhouse-gas reduction against the EU fossil-fuel benchmark.

 

Italy Chooses 15-Year Two-Way CfDs

 

The support mechanism differs from a simple production subsidy.

 

Winning projects will receive 15-year two-way Contracts for Difference. If the calculated market reference price for hydrogen is below the project's auction strike price, GSE pays the producer the difference.

 

If the reference price rises above the strike price, hydrogen sold to customers requires the producer to return the difference to GSE.

 

For transport projects, the system can also recognise additional hydrogen compression and storage costs.

 

Successful projects must begin operating within 36 months of publication of the auction results.

 

Awards Can Continue Through 2029

 

Italy can grant new support under the scheme until December 31, 2029, with competitive rounds expected at least every six months.

 

The €400 million figure is the estimated annual subsidy budget, while the €6 billion headline previously approved by Brussels reflects the expected cost of paying long-term CfDs over their full 15-year lives.

 

That distinction is important: Italy is not committing €6 billion of immediate spending.

 

The auctions will now provide a much clearer indication of what Italian renewable hydrogen actually costs and whether developers can move projects from subsidy applications into operating plants.

 

Source：Hydrogen Europe