[AI Era Electric Power as National Strength]⑪ Can Hydrogen, Combining 'Eco-friendliness and Stability,' Become an Alternative for AI Data Centers?

Hydrogen: Lower Carbon Emissions, Higher Energy Efficiency
Overcoming the 'Intermittency' Drawback of Renewable Energy
Narrowing the Power Generation Cost Gap Is Key

As the power demand for artificial intelligence (AI) data centers surges, there is growing interest in AI data centers using hydrogen, which can supply power in an eco-friendly and stable manner. AI data center projects utilizing hydrogen fuel cells or hydrogen (ammonia) power generation are emerging one after another. However, the high power generation cost due to expensive hydrogen prices remains a challenge to be solved.

In December last year, Gyeongbuk Province signed an investment agreement with Gumi City, Gumi High-Tech Energy, and Koramco Asset Management to build an AI data center and a hydrogen fuel cell power plant. The investment agreement includes investing 2 trillion won by 2028 in Gumi High-Tech Valley to establish a 100 MW AI data center and a 60 MW hydrogen fuel cell power plant. The goal is to obtain all permits for the data center within this year and start construction from next year.

The Gumi AI data center plans to use hydrogen fuel cells as the main or auxiliary power source. Hydrogen fuel cells generate electricity through a chemical reaction between hydrogen and oxygen, offering advantages such as low carbon emissions and high energy efficiency. Especially in facilities like data centers where uninterruptible power supply (UPS) is essential, hydrogen fuel cells can provide a stable power source. Solar or wind power generation experiences significant output fluctuations depending on weather conditions, requiring separate installation of energy storage systems (ESS). In contrast, hydrogen fuel cells can maintain a constant output, making them suitable for data center operations.

There is no technical problem in sourcing 100% of the electricity used in data centers from hydrogen fuel cells. The key issue is the power generation cost. Park Hye-jung, CEO of Gumi High-Tech Energy, said, "According to our calculations, the general electricity rate is 157 won per kWh, but hydrogen power generation is priced around 230 to 240 won. Overcoming this cost difference is crucial."

When private companies invest, they must participate in the government’s Clean Hydrogen Power Supply Obligation System (CHPS) bidding market. The Ministry of Trade, Industry and Energy held the first bidding last December, but only one company won the bid. Other participating companies could not meet the power generation cost requirements. Currently, due to the expensive hydrogen price, the structure is such that if companies bid at the government’s desired price level, they cannot make a profit.

An industry insider said, "The introduction of the Clean Hydrogen Power Supply Obligation System itself is the right direction, but from the operator’s perspective, it is difficult to apply for bidding because the structure is not profitable." The hydrogen power generation industry is taking a wait-and-see approach, hoping for changes in government policy. CEO Park also said, "I believe there is a high possibility that the bidding market will change by the first half of 2027, when construction is expected to begin," adding, "We can then see how power generation costs are formed and specify the ratio of mixing general electricity and hydrogen or other plans."

Another limitation is that commercializing clean hydrogen, which produces almost no air pollutants, remains difficult. Currently, 76% of the world’s hydrogen is produced by natural gas reforming, which uses steam-methane reforming reactions with natural gas. Although economical due to the use of existing facilities, the reforming process requires additional energy consumption and demands high temperature and pressure, resulting in high facility costs. CEO Park said, "Ultimately, we are considering using clean hydrogen, but from a profitability perspective, we are contemplating various hydrogen supply options."

There is also a project underway for an AI data center using hydrogen combustion power generation. Hydrogen combustion power generation refers to producing electricity by driving turbines with the force generated from burning hydrogen. Samsung C&T and Korea South-East Power announced in November last year that they will invest a total of 4.5 trillion won to build a 900 MW hydrogen combustion power plant, a 300 MW large-scale energy storage system (ESS), and a data center in Dangjin, Chungnam by 2032.

The hydrogen combustion power plant plans to produce power by receiving hydrogen from the Dangjin Songsan ammonia storage facility currently under construction and supply it to nearby data centers and industrial complexes. This will be the first hydrogen combustion power plant.

However, hydrogen combustion power generation still has a long way to go. In Korea, ammonia-coal co-firing (mixed combustion) or hydrogen-gas (LNG) co-firing power generation is still at the demonstration stage. Developing separate turbines is necessary for hydrogen combustion power generation, and power generation costs increase. Lee Deok-han, emeritus professor of chemistry at Sogang University, criticized, "Producing clean hydrogen using ammonia in countries that do not produce ammonia is economically very inefficient," adding, "Technically, there are no advantages to ammonia power generation so far."

Despite these difficulties, the government plans to expand clean hydrogen (ammonia) power generation to 43.9 terawatt-hours (TWh) by 2038, which corresponds to 6.2% of total power generation. On the 12th of last month, the Ministry of Industry held a meeting with power generation public enterprises focused on coal-gas fuel thermal power and private power companies to discuss measures to activate clean hydrogen power generation. Following the first clean hydrogen power generation bidding last year, the second bidding is scheduled to be announced in May this year.