[C Tech Now] First Clean Hydrogen Power Generation Bid of the Year Requires 'Preliminary Review Consulting'

Submission of Production Plan at Design Stage
Review of Compliance by Operating Agency
Utilization as Reference Material for CHPS
No Legal Effect

Hydrogen is an important energy source for carbon neutrality by 2050. In South Korea, hydrogen has been presented as a key means of reduction in power generation, industry, and transportation sectors in the 2030 Nationally Determined Contribution (NDC) for carbon reduction. Among these, the power generation sector accounts for the majority of hydrogen demand.

According to the 2030 NDC and the 10th Basic Plan for Electricity Supply and Demand (Jeon-gibon), the share of clean hydrogen, ammonia, and co-firing power generation will gradually increase from 2.1% in 2030 to 7.1% in 2036. Based on this, the demand for clean hydrogen in 2030 is expected to reach 800,000 tons.

The government opened a general hydrogen power generation bidding in June last year and plans to start clean hydrogen power generation bidding in the first half of this year. The hydrogen power generation bidding system separates hydrogen power generation from other general power markets so that hydrogen producers can be compensated for the high cost of hydrogen production. The general hydrogen power generation bidding was contracted under a Contract for Difference (CFD) scheme, while the clean hydrogen power generation bidding will be promoted under a power generation difference support scheme.

Unlike general hydrogen power generation, clean hydrogen power generation must use only hydrogen certified as clean hydrogen (including clean ammonia). Co-firing power generation mixing liquefied natural gas (LNG) with clean hydrogen or mixing ammonia with coal is also possible. The total purchase volume for clean hydrogen power generation, which will be opened for the first time this year, is 6,500 gigawatt-hours (GWh). Power generation companies must undergo a three-year preparation period and begin actual power generation from 2027. SK E&S, Hanwha Energy, and Lotte Chemical are known to be currently preparing CHPS projects.

However, many companies wishing to participate in the CHPS bidding have not yet started producing clean hydrogen in earnest. Once the companies secure volumes through bidding, they will produce large quantities of clean hydrogen through facility investments domestically and internationally. Accordingly, the government and the Energy Economics Institute, which operates clean hydrogen certification, plan to conduct ‘preliminary review consulting’ to allow participation in CHPS bidding even if clean hydrogen certification has not yet been obtained.

The preliminary review consulting involves submitting a clean hydrogen production plan at the design stage before actual facility operation, and the certification body evaluates whether the plan meets clean hydrogen standards. If the expected carbon emissions in the review results fall within the clean hydrogen grade, the company can participate in the CHPS bidding.

However, the results of the preliminary review consulting are used only as a reference for CHPS bidding and do not have legal effect. An official from the Ministry of Trade, Industry and Energy explained, "Since the responsibility for the bidding results lies with the business operator, it is advisable for operators to conduct the preliminary review consulting as conservatively as possible."

The government plans to grant pilot certification to clean hydrogen production facilities mainly built and operated for research or demonstration purposes after undergoing facility inspections at the same level as the main certification.