Enel SpA (ENEL.MI) Monday said it opened the world's first hydrogen-run power plant as the Italian utility beefs up its green credentials ahead of the planned multibillion-euro sale of its renewables unit set for the fall.

The new plant located in Fusina, a short distance from Venice , has an overall generation capacity of 16 megawatts. The electricity produced from the facility is sufficient to meet the yearly needs of roughly 20,000 households. Enel's investments in the plant was about EUR50 million.

"This type of plant can be exported in those areas where there are chemical plants nearby," Chief Executive Fulvio Conti said at the inauguration of the facility. "This is a showcase of the development of renewables."

The plant uses hydrogen produced mainly as a byproduct from the nearby petrochemicals site of Porto Marghera. This way Enel has managed to solve one of the biggest headaches for hydrogen: access to the clean fuel without having to use large amounts of energy to produce it.

The Rome-based company plans to sell a minority stake in Enel Green Power SpA later in the year, and has penciled in October as the date for the initial public offering. The renewables energy unit is seen valued at more than EUR12 billion.

Enel is boosting the green operations of its unit as it aims to take advantage of a bonanza in the sector. Later in the week, Enel will inaugurate in Sicily a new pilot plant that uses a new solar power technology to generate electricity.

Hydrogen is gaining popularity in the renewables industry as energy players look for ways to reduce carbon dioxide emissions. In California , BP PLC (BP) is planning a hydrogen joint venture with a capacity of 400MW.

The Fusina plant uses 1.3 metric tons of hydrogen an hour in its generation. It buys the hydrogen from Eni SpA (E).

However, hydrogen as a source to generate electricity is still uncompetitive with traditional hydrocarbons, costing for example about five times more than power produced from coal.

"Today's technology still doesn't allow us to generate electricity at an advantageous cost," said Enel's CEO. Conti said the world is likely to wait "decades" before hydrogen can become competitive.

Enel's decision to invest in the Fusina plant, which is the first industrial-scale facility of its kind, was taken in part to allow its engineers to test hydrogen technology and gain expertise.

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