Europe offers $400 mn for Italian green H2 valley that will decarbonize steel

European authorities have decided to offer up to €370 million ($400 million) to Italian companies seeking to set up a 'Green Hydrogen Valley' in the country's southern region of Puglia.

Italian energy company Edison (part of EDF Group), energy contractor Saipem, and Sosteneo SGR (the green finance arm of financial group Generali) said on Monday they planned to set up 260 MW of solar photovoltaic capacity and 160 MW of electrolysis capacity around the cities of Brindisi and Taranto to produce green hydrogen.

The fuel will be used to decarbonize manufacturing of direct reduced iron at Italy's largest steel plant in Taranto as well as other Italian steel mills.

The European Commission has included the initiative in its Important Projects of Common European Interest (IPCEI) category, thereby unlocking funds from the European Union for project development.

Separately, Italy's grid operator Snam announced that authorities had also included the company's €100 million plan to renovate existing pipelines and install new ones to ferry hydrogen in the IPCEI list. The project is likely to conclude by 2028.

The Puglia Green Hydrogen Valley will be delivered by a special purpose vehicle. Edison holds a 45 percent stake in the project, while Sapiem holds 10 percent. The Italian government holds 5 percent, subject to ministerial approvals, while Sosteneo, which joined the project last, holds 40 percent.

Umberto Tamburrino, Managing Partner at Sosteneo, had commented when joining: "We are proud to be able to contribute to the decarbonization of two of the country's largest industrial steel hubs with a key infrastructure for economic growth at local and national level. We strongly believe in investing in the energy transition with the aim of combining long-term returns for our investors and at the same time contributing to the transformation of the global energy system."