Italy's Snam to buy stake in UK's ITM Power to boost hydrogen drive

MILAN, Oct 22 (Reuters) - Italian gas group Snam
said on Thursday it would buy a minority stake in ITM Power
as part of a broader agreement with the British company
to help it develop its green hydrogen business.

Europe's biggest gas transport operator said it would pay
about 33 million euros ($39 million) for the stake in ITM Power,
one of the largest global producers of electrolysers.

Green hydrogen is produced through electrolysis using solar
and wind power sources and is seen by many as a possible
replacement for fossil fuels.

Snam, controlled by state lender CDP, is one of several gas
infrastructure players in Europe looking to increase the amount
of green hydrogen in their systems on the chance it could one
day replace natural gas.

It has experimented with a 10% mix of hydrogen in part of
its 33,000-km (20,500-mile) natural gas network and has said 70%
of its natural gas grid is already made up of hydrogen-ready
pipes.

"The partnership with ITM Power allows us to build on our
know-how in technologies for the production of green hydrogen
... and to become a player along the value chain," Snam CEO
Marco Alvera said.

Snam was assisted by Barclays, a source close to the deal
said.

Hydrogen is currently too expensive for widespread use but
as costs come down some governments are considering it to
replace fossil fuels in sectors where electrification is not an
easy solution.

The European Commission is looking to develop 40 gigawatts
of green hydrogen in the European Union by 2030 and several
European countries, including Italy, are launching projects.

On Wednesday Snam signed a deal with the Italian railways to
study using hydrogen on the rail network.
($1 = 0.8458 euros)
(Reporting by Stephen Jewkes; Editing by Crispian Balmer and
David Evans)