South Korea is to open a hydrogen power bidding market in the first half of this year, aiming to commercialise clean hydrogen power generation by 2027.
The trade and industry ministry (Motie) views the introduction of hydrogen power generation as essential to achieving nationally determined contribution targets, it said on 21 March, expecting it to cut greenhouse gas emissions by about 8.3mn t by 2030 from 2027 levels.
Motie also expects the opening of what it described as the world's first such bidding market to reduce the unit price of hydrogen power generation on the back of price competition among hydrogen power generation firms.
The ministry on 13 March revealed details on the opening of the bidding market, including bid volumes. The market will be divided into one for general hydrogen power generation and another for clean hydrogen power generation, given that the latter market and supply infrastructure for power generation are not fully established yet.
Only the general market will open for bidding in the first half of 2023. It is scheduled to open once in the first half and another time in the second half of the year. The clean market will open in early 2024 after a clean hydrogen certification system and relevant laws are enacted. Motie expects the general market to supply about 8,000GWh by 2030.
The general market will open in 2023 with new bids of 1,300 GWh/yr from 2025, although this will gradually be reduced to account for higher clean hydrogen supply in the future. The clean market will start in 2024 with new bids of 3,000-3,500 GWh/yr from 2027 onwards. The specific target of 3,500GWh of power to be generated in 2027 was set lower than target co-firing rates of 50pc for hydrogen and 20pc for ammonia to account for the start-up period of relevant facilities, Motie said, with the targets to be achieved from 2028 and power generation to hit 6,500 GWh/yr.
The ministry is looking to finish developing 50pc hydrogen blending in gas turbines and technology to allow for 20pc ammonia co-firing in coal-fired power plants by 2025 through national research and development, with long-term plans to develop 100pc hydrogen electric turbines and 50pc ammonia co-firing technology.
Utilities will buy electricity from the bidding market from 2025, with buyers' purchase volumes distributed according to the proportion of transactions in the power market the previous year.
Hydrogen power generation contracts in the market will range over 10-20 years and can be purchased first in the power market. The ministry plans to resolve the uncertainty of private investment in the hydrogen ecosystem by implementing these long-term contracts of 10 years or more. The contract period for hydrogen power generation volumes secured in the market also needs to be set in consideration of the investment period of overseas hydrogen projects, which is typically 15 years or more.
South Korea intends to create a clean hydrogen market early by introducing a forward market instead of a spot market. It will establish a clean hydrogen supply chain by determining future hydrogen power generation and investing in fuel supply infrastructure before producing electricity.
Fostering domestic industry
Motie also hopes to encourage domestic companies to participate in the hydrogen industry themselves instead of simply acquiring foreign companies. Companies will need to pre-emptively build infrastructure for public institutions such as acquisition bases and pipes, Motie said, adding that government support including budget support will be provided.
Localisation of co-firing facilities, domestic clean hydrogen production and the introduction of overseas clean hydrogen that has domestic firm involvement should be taken into account during evaluations of producer bids, so to foster the domestic hydrogen market, industry participants suggested during a meeting with Motie on 21 March.
"The commercialisation of clean hydrogen power generation in 2027 is a bold challenge to achieve carbon neutrality," said Motie deputy minister Cheon Young-gil. "We will continue to communicate closely with the industry, including today's meeting, and establish a bidding market system to promote voluntary private investment and employment through clean hydrogen power generation and to grow the domestic hydrogen industry."
