Successful bidders in Italy's green hydrogen subsidy scheme could on average secure support of €2/kg over 15 years, above what most European Hydrogen Bank beneficiaries will receive but below some national allocations elsewhere in Europe.
The Italian government on 7 August published the framework for the subsidy programme in its official gazette, setting out eligibility criteria, application procedures and funding allocation rules.
The €6bn budget is slated to support 200,000 t/yr of hydrogen made using renewable power or biogenic feedstock over 15 years. Annual allocations are capped at €400mn.
This implies average support of €2/kg over the support period. A sample project producing 10,000 t/yr could receive €300mn in total, based on that average. Final allocations could vary widely between projects, and overall funding may not reach the full budget.
The implied average would still make the Italian scheme more generous than some other major EU subsidy mechanisms. Most European Hydrogen Bank awards have stayed below €1/kg over a shorter 10-year period, although some developers have secured much higher support from Spain's and Austria's national auctions-as-a-service allocations and from a dedicated maritime topic.
Most capital cost allocations under the Important Project of Common European Interest (IPCEI) framework also translate into the equivalent of less than €1/kg over 15 years.
But awards under France's renewable and low-carbon hydrogen support scheme and the Dutch SDE++ decarbonisation programme would be higher than Italy's average allocations on a per-kg basis. UK producers with subsidy contracts under the first hydrogen allocation round (HAR1) also stand to receive more support.
Direct comparisons are limited by the scheme's design. The European Hydrogen Bank and the French mechanism are based on fixed premium payments, but the Italian programme is set up as a contracts-for-difference scheme, similar to the UK's hydrogen allocation rounds.
Final payments will depend on the gap between green hydrogen prices and monthly reference prices. These reference prices will be calculated using several factors, including prices for natural gas, grey hydrogen or diesel, depending on the green hydrogen offtake sector.
If green hydrogen prices fall below reference prices, developers would have to pay the difference to state-owned energy company GSE.
Producers delivering hydrogen directly to the transport sector could receive higher support than developers targeting industrial offtake, because a €2/kg premium will apply to their output. Support will not be restricted to Italian projects. Plants elsewhere in the EU or in Switzerland could receive backing for supply exported to Italy. Successful bidders would have to start production within 36 months of being selected.
Italy's €6bn allocation is the highest budget for operating subsidies set aside by any EU member state. The 200,000 t/yr it could support should help meet much of the demand created by targets under the EU's revised Renewable Energy Directive (RED III).
Italy could require around 148,000 t/yr of renewable hydrogen demand in road, air and sea transport and another 90,000 t/yr for industrial applications to meet its 2030 RED III targets, industry association H2IT estimates.
