South Korea to open a hydrogen energy market

Inspenet, April 13, 2023

The Ministry of Industry and Trade (Motie) of South Korea considers the introduction of hydrogen power generation essential to meet nationally determined contribution targets, they reported, and expects it to reduce greenhouse gas emissions by some 8.3 million tonnes by 2030 compared to 2027 levels.

Motie also hopes that the opening of what it described as the world’s first tender market of its kind will drive down the unit price of hydrogen power generation thanks to price competition among power generation companies.

The ministry published the details of the opening of the offer market, including the volumes offered.

The market will be split into one for general hydrogen power generation and one for clean hydrogen power generation, as the latter market and the supply infrastructure for power generation are not yet fully established.

Only the general market will be open to bidding in the first half of 2023. It is scheduled to open once in the first semester and once in the second. The clean market will open in early 2024, after the relevant laws and a clean hydrogen certification system are enacted. Motie expects the general market to supply around 8,000 GWh in 2030.

The general market will open in 2023 with new offers of 1,300 GWh/year from 2025, although it will be gradually reduced to account for a greater supply of clean hydrogen in the future. The clean market will start in 2024 with new offers of 3,000-3,500 GWh/year from 2027. The specific target of generating 3,500 GWh of electricity in 2027 was set below the co-firing percentages of 50% for hydrogen and 20% for ammonia, in order to take into account the start-up period of the plants. corresponding facilities, according to Motie.

By 2025, the Ministry wants to finish developing a 50% hydrogen mix in gas turbines and a technology that enables the co-firing of 20% ammonia in coal-fired power plants, through national research and development, with long-term plans to develop 100% hydrogen electric turbines and 50% ammonia co-firing technology.

Starting in 2025, power companies will buy electricity on the tender market, and buyers’ purchase volumes will be distributed based on the proportion of transactions made on the power market in the previous year.

Hydrogen generation contracts in the market will have a duration of between 10 and 20 years and can first be purchased in the electricity market.

The ministry plans to resolve the uncertainty of private investment in the hydrogen ecosystem by applying these long-term contracts of 10 years or more. The contract period for the hydrogen power generation volumes secured in the market should also be set taking into account the investment period of overseas hydrogen projects, which is typically 15 years or more.

South Korea aims to create a clean hydrogen market soon by introducing a forward market instead of a spot market. It will establish a clean hydrogen supply chain by determining future electricity generation from hydrogen and investing in fuel supply infrastructure before producing electricity.

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