South Korea has become the first country in the world to establish a Clean Hydrogen Power Generation Bidding Market (CHPS). Clean hydrogen is classified into four grades, from Grade 1 to Grade 4, based on the amount of carbon dioxide emitted during hydrogen production. In this bidding, relatively higher scores were assigned to Grade 1 clean hydrogen. Power generation companies using existing 'Green Hydrogen' produced from solar and wind energy are expected to have an advantage.
The Ministry of Trade, Industry and Energy announced on the 24th that it will open the world's first clean hydrogen power generation bidding market.
The clean hydrogen power generation bidding market is a system for purchasing and supplying electricity generated using clean hydrogen (including clean ammonia) as fuel. Power generation companies are expected to mainly participate in bids centered on liquefied natural gas (LNG)-hydrogen or coal-ammonia co-firing power generation.
Only power generators using fuel that meets the domestic clean hydrogen certification standard (greenhouse gas emissions of 4 kg CO2e or less per 1 kg of hydrogen) can participate in this market. The bidding volume for this year is 6,500 GWh, and the contract period is 15 years. Actual power generation will take place in 2028. There is a 3-year business preparation period and a 1-year grace period. As it is the world's first, sufficient time has been provided.
The announcement and deadline for the clean hydrogen power generation bidding are from May 24 to November 8. The Ministry of Trade, Industry and Energy explained, "The period was set to 24 weeks considering the time required for power companies to conclude fuel procurement contracts."
The final successful bidder will be selected around December by comprehensively evaluating price indicators such as the power generation unit price after the bid proposal deadline, clean hydrogen utilization grades (4 grades), fuel procurement stability, and non-price indicators such as industrial and economic contributions. Overall, 60 points are allocated for price evaluation and 40 points for non-price evaluation.
In particular, a significant difference in scoring was made between Grade 1 and Grade 4 in the clean hydrogen grade evaluation. When converting the non-price evaluation to 100 points, Grade 1 clean hydrogen is awarded 35 points, while Grade 4 receives 1 point.
Grade 1 clean hydrogen refers to cases where the amount of greenhouse gases emitted when producing 1 kg of hydrogen is 0.1 kg CO2e or less, which practically corresponds to existing green hydrogen. Green hydrogen is produced by electrolyzing water using electricity generated from renewable energy sources such as solar and wind power.
Following this announcement, power generation companies are expected to prepare for bidding by forming consortia and devising plans to secure stable raw materials. Participants are anticipated to procure clean hydrogen or clean ammonia through overseas resource development or equity investment methods.
Meanwhile, the general hydrogen power generation bidding market will also be established this year following last year. The general hydrogen power generation bidding market aims to promote installation as distributed power sources. Existing reforming hydrogen or by-product hydrogen can also participate.
The bidding volume is 1,300 GWh, and the contract period is 20 years. Actual power generation must commence by 2026 after a 2-year business preparation period. The final successful bidder will be selected around August by evaluating price indicators, power grid impact, and non-price indicators such as industrial and economic contributions, similar to last year.
For detailed information such as the bidding announcement, please refer to the hydrogen power generation bidding market site of the Korea Power Exchange.
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