3. Update of the italian NECP scenario considering the new objectives of the Green Deal program
GHG reduction target (% CO2eq) Emission reduction – Mton CO2 eq
40%
37%
55%
51%
EU IT
NECP
Green
Deal
Green
Deal
520
328
256
Storico 1990 PNIEC 2030 Green Deal
-51%
-37%
New emission target of Green Deal program…
1990 NECP Green Deal
3
4. …means a faster decarbonization path
A significant constraint: total decarbonization by 2050
0
100
200
300
400
500
600
700
1990 2000 2010 2020 2030 2040 2050
Mt
CO
eq
NECP
-37%
NECP
-51%
The new GHG objective is supported by further targets or methodological choices that influence the evolution of the
scenario
How to achieve a faster decarbonization?
• Hydrogen
• CCS/CCU
4
5. Current uses of hydrogen in Italy…
Ammonia;
108
Stirene (by-
product); 13
Chloralkali, 8
Refinery
(SMR); 323
Refinery
(IGCC); 38
0
100
200
300
400
500
600
2018
Consumption 2018 (kton H2)
84
23
Stirene (by-
product); 13
Chloralkali, 8
323
26
12
0
100
200
300
400
500
600
2018
Potential conversion to green H2 (kton H2)
Ammonia
Refinery
H2 production by sector and technology;
possibility of conversion to green hydrogen
5
6. Industry hard to abate
Hydrogen can support the decarbonization of "hard to abate" sectors characterized by
the lack of efficient/applicable electrification solutions.
Trucks
Interesting opportunity in long-distance road freight transport: 2030 preference criteria
include longer mileage with a full tank, fast refueling times, and higher transportable
tonnage than an equivalent electric vehicle.
Trains Hydrogen trains may be a solution on routes not easily electrifiable.
…and new opportunities
Opportunities for hydrogen use by sectors, in addition to current uses
H2
H2
6
7. H2 scenarios
1. Hydrogen
• The scenario includes the NRRP* indications, in particular:
• 5 GW of electrolyzers by 2030;
• ILVA** conversion to H2;
• No H2 consumption constraint in other sectors.
2. Hydrogen+
• It starts from case 1, the use of green H2 in refineries and petrochemicals is forced;
• H2 constraint for blending in natural gas grid;
• H2 constraints for trains and trucks.
Two scenarios were created and analyzed with TIMES_RSE model with the target of a reduction by 2030 of greenhouse
gas emissions by 51% compared to 1990 values.
*NRRP: The National Recovery and Resilience Plan
**main steel production industrial plant in Italy
7
8. Scenario
H2 trains H2 trucks H2 blending H2 industry Refinery Chemical
kton kton kton kton H2 type H2 type
Hydrogen
No consumption
constraints*
No constraints* No constraints*
40
(ILVA conversion)
No obligation of
conversion to low
carbon H2
No obligation of
conversion to low
carbon H2
Hydrogen+ 10 50 60 40
green H2
+ gray H2 **
green H2
+ gray H2 **
H2 constraints in scenarios
* TIMES model is free to choose whether to use low carbon H2 to meet the 2030 decarbonization constraint
** hydrogen that cannot be replaced with green H2 is shown in red, more detail in next slide
8
9. Evolution of hydrogen in current sectors of utilization
382
303
108
109
490
411
0
100
200
300
400
500
600
2018 2030
kton
Chemical*
Refinery
TOT
** final energy uses, non-energy uses, bunkers
* In line with the sectoral macroeconomic forecasts by 2030
Refinery - Mtoe 2018 2030
export 29.9 29.9
consumption** 48.6 33.5
78.5 63.4
Evolution of H2 in current sectors of utilization
(kton)
Oil products by 2030
(Mtoe)
• By 2030, the current export of petroleum products is
maintained in scenario, while the lower national demand
leads to a reduction in the production of petroleum
products;
• Not all the current gray H2 can be replaced with green H2:
in part it is obtained as a by-product of the SMR (steam
methane reforming) process in the chemical sector;
• about 100 kton of gray H2 not convertible in green H2 by
2030
9
10. 490
411 411
145 173
0
100
200
300
400
500
600
700
2018 Hydrogen Hydrogen+
kton
Current use of H2 New uses for H2
Evolution of H2 in all sectors of utilization
(kton)
Hydrogen colors
(kton)
Total hydrogen consumption by 2030 (1)
Scenario
H2 TOT green H2 gray H2
kton kton kton
Hydrogen 556 145 411
Hydrogen+ 583 483 100
10
11. Scenario
H2 TOT H2 trains H2 trucks H2 blending H2 industry Refinery Chemical
kton kton kton kton kton kton kton
Hydrogen 556 10 85 0 50 303 108
Hydrogen+ 583 10 60 60 43 303 108
11
Total hydrogen consumption by 2030 (2)
H2 consumption by sectors in 2030
(kton)
100% of green H2
100% of gray H2
Mix of green and gray H2
11
12. Impact of H2 on electricity consumption
H2 scenarios
2018 NECP Hydrogen Hydrogen+
Industry 116 111 110 110
Residential 65 69 70 69
Services 100 100 90 85
Transport 12 23 38 38
Refinery and energy branch 10 8 7 7
P2Hydrogen 0 0 8 22
P2G (renewable gases) 0 0 0.3 0.3
Losses 18 20 20 20
Grid request 321 331 343 352
Electricity consumption by sector in 2030
TWh
Considerations
• The development of PtoH2 increases electricity demand. Up
to 9 TWh difference between H2 scenarios.
• There is electricity consumption for P2X, mainly for H2
production (between 8 and 22 TWh). Assessment on the
electricity sector and the operation of P2X
• Electricity demand grows by 4-6% vs NECP
12
13. Impact of H2 on electricity generation
• The penetration of green hydrogen increases the development of RES, in particular PV and wind;
Electricity generation by sources
TWh
Capacity by sources
GW
51 49 49 49
18 39 47 48
23
73
89 92
17
16
22 25
31
132
119
91 96
290
311 320 330
0
50
100
150
200
250
300
350
2018 NECP Hydrogen Hydrogen+
TWh
Offshore wind
Natural gas
Coal
Oil products
Waste (non renewable)
Bioenergies
Geothermal
Solar
Onshore wind
Hydroelectric
TOT
GW 2018 2030 2030 2030
NECP Hydrogen Hydrogen+
Hydroelectric 18.9 19.2 19.2 19.2
Onshore wind 10.3 19.3 21.4 21.4
Offshore wind 0.0 0.9 2.5 2.5
PV 20.1 51.1 63.0 64.5
CSP 0.0 0.9 0.9 0.9
Coal 8.7 0.0 0.0 0.0
Natural gas 48 50.0 52.4 53.3
Oil products 2.5 0.8 0.8 0.8
Bioenergies 4.2 3.8 5.6 5.7
Geothermal 0.8 1.0 1.0 1.0
13
14. Detailed analysis on power system
Objectives of power system analysis:
Feedback to energy model: information about how much electricity from renewables can be efficiently used
by P2X technologies;
Information on load factor of P2X and therefore on the capacity to be installed and related investments;
Evaluate the role of P2X systems as flexibility resources for the power system (P2X vs storage)
The TIMES_RSE energy model does not have a temporal and spatial detail able to discriminate
whether the production of H2 from electrolyzers is from renewable electricity or not.
-> A more detailed analysis must be carried on the power system
14
16. The capacity for P2X and storage is determined considering 5 different evaluation criteria:
1. Use of electricity only from renewables for P2X;
2. Allow the highest possible load factor for P2X;
3. Provide the desired amount of H2;
4. Minimize the thermoelectric production;
5. Contain renewable overgeneration to meet renewable targets penetration;
We performed simulations (by varying the installed quantities of P2X and storage) characterized by the hypothesis of
purchasing electricity for P2X with a price low enough:
• to guarantee that only electricity produced in hours of excess production by renewable is used for P2X;
• produce H2 at a lower variable cost than H2 from SMR.
Power system simulations (2030)
16
17. Sensitivity on «Hydrogen» scenario
Impacts on power system (sensitivity for Hydrogen scenario)
P2X capacity Storage capacity
Storage
(consumption)
Overgeneration
P2X
(consumption)
P2X
(hours)
P2X
consumption
in TIMES
results
Additional
investments
vs TIMES
results
case GW GW TWh TWh TWh h TWh B€
a 5 GW P2X 0 9.9 5.9 8.0 1486
8
0
b 5 GW P2X 6 14.9 2.0 5.4 1070 12
c 7 GW P2X 2 (0,5 SdA+1,5 HP) 11.3 2.4 8.0 1144 3.7
• a) energy model case: the configuration from the energy model satisfies the demand of H2, but there are 6 TWh of overgeneration;
• b) national plans case: 5 GW of electrolyzers from NRRP + 6 GW of storage from NECP, do not guarantee the satisfaction of H2 demand
and generate an extra cost compared to a) of 12 B€ related to storage (to reduce overgen.) and additional dedicated RES plants +
electrolyzers necessary to guarantee H2 production;
• c) green case: in order to guarantee the H2 production keeping a lower overgeneration, it would be necessary to increase the
electrolyzers capacity from 5 to 7 GW adding 2 GW of storage, with an extra investment cost of € 3.7 billion and a lower load factor.
17
18. Sensitivity on «Hydrogen+» scenario
P2X capacity Storage capacity
Storage
(consumptio
n)
Overgeneratio
n
P2X
(consumptio
n)
P2X
(hours)
P2X consumption
in TIMES results
Additional
investments
vs TIMES
results
case GW GW TWh TWh TWh Ore TWh B€
a 10 0 10.4 3.0 14.2 1416
22.6
+7.5
b 10 3 13.0 1.6 10.3 1032 +15.7
d 11,5 0,5 SdA + 1,0 HP 11.6 1.6 12.1 1052 + 12.2
Impacts on power system (sensitivity for Hydrogen+ scenario)
• In Hydrogen+ scenario, centralized electrolyzers are unable to produce all the necessary green hydrogen; it will be necessary to use
additional dedicated RES plants in the network with additional electrolyzers.
• Moreover, to guarantee that all production of H2 is from RES, centralized electrolyzers would work with a rather low load factor.
• High extra cost compared for storage (to reduce overgen.) and for additional dedicated RES plants + electrolyzers necessary to guarantee
green H2 production;
18
19. Investments
B€ NECP Hydrogen Hydrogen+
Sector 2017-2030* 2020-2030 2020-2030
Residential 180 160.7 158.6
District heating 1.6 1.5 1.5
Services 90 118.2 124.0
Industry 33 24.0 24.6
Transport 759 681.6 687.6
Power system 85 108.2 118.2
System 46 43.1 44.8
TOT Investments 1194 1137 1159
TOT Investments for H2 0 12.1 21.3
Cumulated investments in 2020-2030* period
Billions of euro
Note: Investments for storage and logistics of H2 are excluded
19
*NECP investments cover a period of 14 year instead of 10 (about 900 B€ in 10 years)
20. Key messages
Hydrogen cost:
• uncertainty on capex of electrolyzers: without accelerating the reduction of capex (beyond EUref2020 forecasts), extra costs
would be introduced for the system in the short term;
• low load factor of P2X with 100% green H2;
• green H2 is currently much more expensive than gray H2;
Non-programmable renewables
• Additional +60 GW of capacity required (vs 2020): a very challenging objective (installation must be promoted with support
schemes);
• the renewable installation targets is needed to produce green H2;
• P2X technologies reduce renewable overgeneration -> less need of storage compared to NECP scenario;
EU regulatory framework
Revision of the main European directives on climate and energy can affect the way hydrogen is produces and used in the various
sectors:
• accounting of green H2 in RED directive (FF55 package);
20