The EU’s energy policy, which is being backed in Italy by money from the PNRR, has as its objective to make Europe the first continent with zero emissions by 2050. The hydrogen supply chain has a key player role in this effort.
But what is the current situation of the industry?
H2IT Observatory: The Numbers on the Italian Hydrogen Sector was presented at Key Energy, the reference fair for the renewable energy market, by H2IT—the Italian Association of Hydrogen and Fuel Cells—in collaboration with the Studies and Research Department and the Innovation Center of Intesa Sanpaolo. The analysis serves as a sneak peek at the Observatory’s findings on H2IT-affiliated businesses (big, medium-sized, and small businesses, start-ups), which represent the complete hydrogen value chain from production to usage.
According to the survey conducted in October by the Intesa Sanpaolo Studies and Research Department, the hydrogen industry is expanding but is still in its infancy (the incidence of hydrogen on total turnover was equal to an average of 6% in 2021), making it unique in the context of national manufacturing. For more than 70% of the companies in the sample, innovation in the hydrogen sector is the result of partnerships with other businesses.
According to the poll, investments play a crucial role for businesses in the hydrogen supply chain as they deal with the significant technological and non-technological issues brought on by the energy revolution. In general, more than 70% of businesses have internal R&D departments devoted just to hydrogen, and 7% still plan to set up shop in this manner. When asked about their expectations for the year’s conclusion, more than half of the respondents (67%) said that investments will have increased from 2021 to 2022.
Hydrogen technology innovation continues to be mostly driven by private resources (on average 67% of the total invested). However, the proportion of public funding used by smaller businesses that have less access to private finance (banks and funds)—both European (13%) and national and regional (10%)—is still tiny. However, participation in public bids is substantial, with national tenders having a participation rate of 72% and European tenders involving 60% of enterprises. 62% of businesses anticipate increased turnover by the end of 2022 compared to 2021. Some crucial queries were answered by H2IT President Alberto Dossi.
What effects are the energy crises, rising commodity prices, and the unpredictability of the geopolitical environment?
The hydrogen industry has continued to grow despite the current macroeconomic challenges. The contemporary context has little impact on the hydrogen market participation of the other half of the sample. Some businesses may even benefit from this circumstance; 38% perceive new business opportunities and are consequently stepping up investments. Therefore, the sector’s expansion may be aided by the acceleration of the energy transition that the current geopolitical and economic environment is providing.
Let’s talk about employment now. According to Enea’s “Planet Hydrogen” assessment from 2021, the hydrogen sector in Italy alone might add 300,000 to 500,000 employment by 2050. Excellent news, but it doesn’t fit with the way things are right now. The companies claim that the hydrogen industry has trouble obtaining specialists at the technical, operational, and design levels: 66% of the sought-after profiles would be challenging to find, with peaks of 77% for expert personnel. Due to the significance of design and prototype activities in this early stage of the industry’s industrial development, companies also have a considerable requirement to engage project managers.
But what are the other significant problems impeding the sector’s development?
Companies are most harmed by the absence of a clear regulatory framework (79%) and the uncertainty associated with a market demand that is still mostly undefined (69%). Additionally, about half worry that the amount of renewable energy will not be enough to produce enough green hydrogen, and the percentage of businesses (50%) that think the costs of the technologies are too high is still significant. Furthermore, according to 83% of respondents, Repower EU’s goals of producing 10 million tons of green hydrogen in Europe by 2030 can only be achieved with significant legislative changes.
Therefore, it is not unexpected that the measures listed by businesses as being most important for the sector’s development are all related to governmental intervention: for instance, the definition of laws and regulations at the national level, followed by increased investments for demand generation. and from the definition of national strategic plans.
According to Alberto Dossi, president of H2IT, “The sensitivity of European and Italian politicians and public opinion towards hydrogen has never been higher.” The Old Continent nations, including Italy, are being forced by the energy crisis to look for alternatives to conventional supply, and the first findings are starting to emerge. The supply chain, which consists of both established and startup businesses, is acutely aware that new partnerships and alliances are constantly being formed in our industry with the goal of fostering innovation and technology. If adequately supported, by 2030 hydrogen will significantly aid in the decarbonization of several industries, including transportation and those that are difficult to abate, where the majority of the PNRR hydrogen expenditures have been focused. It is also vital to concentrate on a single vector, such as hydrogen, especially on the green one, derived from renewable sources and a safe protagonist of the energy mix of the future, in order to realize the ideal of an Italy and a Europe with zero emissions. Since its beginnings, H2IT has worked to promote cooperation and provide the supply chain with a unified voice in politics. As a result, we implore the institutions to continue working on incentive instruments and streamlining legislative interventions, particularly in light of recent private investments.”
“Letizia Borgomeo and Anna Maria Moressa, economists of Intesa Sanpaolo’s Studies and Research Department who oversaw the report, stated that in a very complicated and uncertain future, particularly on the energy front, it is vital to hasten the energy transition. “Hydrogen will play a key role in this regard, and it is not surprising that over 40% of the companies we spoke with the state that new business prospects are being created and that their investments are growing in the current environment. It will be crucial in the coming years to support business investments with adequate regulatory and policy interventions that clarify the national strategies of development of the sector and, most importantly, train those professional figures that companies struggle to find: over two-thirds of companies say they struggle to find professionals. The presence in Italy of a complete and competitive supply chain, such as the one that emerges from this first analysis, is an important starting point. The Italian manufacturing sector may benefit significantly from hydrogen, along with all the other technologies required for decarbonization and the energy transition; it is critical to be aware of this and act accordingly as a national system to prevent wasting this chance.
The Observatory was created in 2021 as a result of a collaboration between H2IT and the Intesa Sanpaolo Innovation Center as part of the INNOVAHY project. The project aims to support the development of creative SMEs and start-ups in the hydrogen industry as well as to promote the emergence of new realities.