Italy is betting on green hydrogen imports from North Africa to revamp its plans to become southern Europe’s energy hub, after leaders of Italy, Germany and Austria signed a Joint Declaration of Intent at the end of May to develop a hydrogen corridor between the three countries.

The SoutH2 Corridor, a development already included in the EU’s Projects of Common Interest list, aims to bring low-cost renewable hydrogen from North Africa to hard-to-abate demand clusters in Italy, Austria and Germany.

The project —led by transmission system operators Snam, TAG, GCA and Bayernets—forms part of the European Hydrogen Backbone and has a capacity of 4mt/yr

According to its developers, it could deliver more than 40% of the European Commission REPowerEU plan’s import targets.

“It will be important for producers to ensure they can meet the same standards as in Europe” Woodward, Aurora

More than 70% of the corridor will rely on repurposed gas infrastructure. Europe is targeting 10mt/yr of green hydrogen imports by 2030. The renewable hydrogen would be largely produced in North Africa.

North African hydrogen price levels are expected to be below €5/kg ($5.34/kg) in 2030, excluding the cost of transport, Emma Woodward, European hydrogen market lead at consultancy Aurora Energy Research, told Hydrogen Economist.

“However, given the [carbon border adjustment mechanism], it will be important for producers to ensure they can meet the same standards as in Europe,” she said.

“There is no particular reason to expect this to be a problem from a technical perspective, but [it will] potentially [be] a bureaucratic hurdle to cross.”

The project will have a key role in supplying the southern states in Germany and is one of the five corridors the country is focusing on, Germany’s federal minister for economic affairs and climate action, Robert Habeck, said.

“Signing agreements with offtakers is one of the biggest challenges for producers of renewable hydrogen and, although Germany represents a major future market, each individual project will face a separate set of hurdles to getting these offtake agreements over the line,” Woodward said.

“There will also be competition from other markets, both within Europe—where hydrogen production costs in Iberia and the Nordics are even lower—and also from projects elsewhere globally which are very focused on exports. All of these projects will however be reliant on infrastructure being available.”

At the same time, Aurora’s previous research suggests “Germany may be overbuilding its pipeline network, with more capacity planned than is needed to meet demand,” Woodward said.

Southern hub

For Italy, importing green hydrogen from North Africa could provide the opportunity for it to develop into a South Europe energy hub, a goal it already pursued for natural gas.

The CEO of Snam, Stefano Venier, said recently that, thanks to its “unique geographic position”, Italy could be a “bridge between different areas of the Mediterranean and Europe”.

This would give Snam a central role to play through both the hydrogen corridor project and its participation in the Trans-Adriatic Pipeline as well as gas pipelines in Greece and Tunisia and regasification terminals in Italy.

The signing of the deal “signals the political willingness to kickstart a hydrogen economy in Italy” and allows it to “finally play the role of Mediterranean energy hub”, Andrea Bombardi, global market development executive vice-president at Italian inspection, certification and engineering consultancy group RINA, told Hydrogen Economist.

Domestic hydrogen production prospects do not look very favourable, with no Italian project qualifying for the first EU hydrogen auction round held recently.

“Italy does not have much renewable capacity,” with renewables accounting for roughly one-third of domestic power production, he noted.

Decarbonising power generation is likely to remain the main target of domestic renewables capacity moving forward.

4mt/yr – SoutH2 Corridor pipeline capacity

This, coupled with less favourable conditions for producing renewable hydrogen compared with solar-based hydrogen in Spain and Greece, and wind-based hydrogen in Northern Europe, means North Africa’s imports are crucial for Italy’s hydrogen strategy.

Engineering, design, and advisory services firm AFRY and inspection, certification and consulting engineering multinational RINA published a study last year suggesting Mideast Gulf countries could supply hydrogen to Europe by pipeline at levels of €2.7–2.3/kg by 2030–50. North African hydrogen is expected to stand at similar levels, he said.

Geopolitical risks

Asked whether strengthening ties with North Africa could expose Italy to geopolitical risks and increased energy dependence at a time when it is looking to wean itself from Russian gas dependence, Bombardi said that some level of dependence was inevitable as countries negotiate “energy access and affordability.

Moving forward, hydrogen produced from nuclear power might support Europe’s domestic production, he said.

Switzerland-based energy trader Axpo is looking at both European and imported green hydrogen opportunities, Axpo spokesperson Stephan Weber told Hydrogen Economist.

The company recently inaugurated Switzerland’s largest hydrogen production facility based at the Reichenau power plant, which aims to produce 350t/yr via its 2.5MW electrolyser. It is also pursuing projects in Italy and France among other countries.

At the same time, it signed a letter of support for the South2Corridor when the project was launched.

“In Africa and the Middle East, conditions are much more favourable for the production of renewable electricity, especially PV, which can then be used to supply the electrolysers for the production of green hydrogen,” Luka Cuderman, head of hydrogen strategy at Axpo, said.

“Due to these more favourable conditions, renewable electricity can be produced more cheaply in these regions than in central Europe, which then also has an effect on the price of hydrogen or the price of hydrogen derivatives.”

“What needs to be taken into account, however, is also the transport cost of hydrogen to Europe and also the local distribution possibilities, which can significantly impact the cost of supplying hydrogen,” he said.

Meanwhile, Axpo “is continuously monitoring the development of hydrogen transport infrastructure”, Weber said. “Once the infrastructure is in place, the hydrogen economy will benefit from new transport opportunities.”

“On a project-by-project basis, Axpo might look into the possibility of utilising the future hydrogen pipeline network, not limited only to the SouthH2corridor.”

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Author: Beatrice Bedeschi