CERNUSCO SUL NAVIGLIO, Italy, June 11 (Reuters) -

I ndustrie De Nora began construction of Italy's largest

electrolyser manufacturing plant on Tuesday to meet expected

demand growth for green hydrogen, which forms part of the EU's

plans to replace fossil fuels in energy intensive industries.

Green hydrogen, which is produced by splitting water through

electrolysis, is also seen by some as a potential solution to

the problem of storing excess renewable power such as solar or

wind.

The European Union aims to produce 10 million metric tons

and import 10 million tons of green hydrogen by 2030 in a bid to

replace fossil fuels, which emit carbon dioxide when burned,

contributing to climate change.

De Nora Chief Executive Paolo Dellacha said at an event to

mark the start of building works on the new factory that the

group already had orders to sell electrolysers able to produce

hydrogen with a capacity of 2 gigawatts (GW).

This is equal to the annual production capacity of the

plant, which will cost around 100 million euros ($107 million).

It will benefit from up to 63 million euros in public grants as

it is considered strategic at a national and EU level.

It is due to be ready at the end of 2025 or early in 2026.

"Estimates over the future need for electrolysers vary a lot

and experts now say Europe could need capacity of 100 GW or more

by 2030... these figures make us hope for a very significant

growth potential," Dellacha said at the event.

A joint venture between Saudi Arabia Acwa Power

and Air Products to build NEOM Green Hydrogen Project is

among De Nora's customers for electrolysers, he said.

Meanwhile, Italy, Germany and Austria in May signed an

agreement to cooperate on developing a network to transport

hydrogen from the southern Mediterranean to northern Europe.

A group of companies including Italian gas grid operator

Snam has teamed up to build the SoutH2 pipeline by the

beginning of the next decade, with a financial commitment of

more than 4 billion euros.

Snam CEO Stefano Venier said on the sidelines of Tuesday's

event that group is "very satisfied with its stake in De Nora".

Snam owns nearly 22% in De Nora, having sold part of its

initial stake after the group became public.

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