Korean Clean Hydrogen Power Auction Announcement
The Korea Power Exchange, which manages the electric power market and the national power grid, including the hydrogen power sector, issued a tender notice for the Clean Hydrogen Power Auction.
This follows amendments to the Hydrogen Act in June 2022, its enforcement on November 30, 2023, and the establishment of the Clean Hydrogen Certification System.
The Notice outlines the following key points:
- Auction Volume and Preparation Period
Up to 6,500 GWh of electricity generated from clean hydrogen will be auctioned over a 15-year period starting from commercial operation. For coal and ammonia co-firing, this will cover the remaining plant lifespan. Successful bidders have three years from contract execution to prepare for clean hydrogen power generation. Given that this is the auction’s inaugural year, penalties for construction delays will not be imposed until after 48 months from the contract execution. - Eligibility
Eligible power generation facilities must (i) use clean hydrogen, either by co-firing coal with ammonia, gas with hydrogen, or solely hydrogen, and (ii) hold or have applied for a power generation business license before the tender notice expires. Co-firing facilities must maintain a minimum mixture rate of 20% based on higher heating value. Failure to meet this rate may result in contract price adjustments or termination. - Evaluation Criteria
Bids will be assessed based on price (60%) and non-price factors (40%). Non-price factors include greenhouse gas reduction (45%), industry and economy contribution (15%), business reliability (22%), resident acceptability and project progress (13%), and grid receptivity (5%). - Clean Hydrogen Grade
The primary non-price factor, greenhouse gas reduction, will be evaluated quantitatively: (i) emission coefficient post-hydrogen production (10 points), and (ii) clean hydrogen grade (35 points). A significant point difference between Grades 1 and 2 (“green hydrogen”) and Grades 3 and 4 (“blue hydrogen”) incentivizes the use of higher-grade clean hydrogen. - Implications
The Notice reflects the government’s dedication to carbon neutrality via clean hydrogen, particularly green hydrogen, despite its higher cost, by differentiating points across hydrogen grades. Bidders should carefully consider these factors, as well as the risks of bid cancellation, price adjustments, and contract termination outlined in the Notice, when preparing their proposals.
