South Korea has opened a second round of its clean hydrogen power generation bidding market and has introduced some rule changes that could allow more companies to participate successfully.
Bids can be submitted from today until 17 October. An initial selection will be announced by 31 October and final agreements will be finalised in November, the trade, industry and energy ministry (Motie) said.
The government is looking to subsidise 3 TWh/yr of power generation — primarily by co-firing hydrogen with gas or ammonia with coal — over 15 years. This is in line with what was foreseen for the second round when the programme was first launched, meaning no volumes from last year's first round are carried over.
Seoul had targeted 6.5 TWh/yr through the first round, but awarded only one contract, for 750 GWh/yr, to state-owned utility Kospo. Participation in the first round was below expectations. Five companies submitted bids, but most were above an undisclosed price ceiling.
For the second round, Motie is introducing rule changes that could help more companies submit bids at competitive prices, following industry requests.
The ministry is introducing an "exchange-rate linked settlement system" to reduce currency risks. Power generators have to submit bids in South Korean won, while clean hydrogen or ammonia supply would be typically dollar-dominated. In the first round, Motie applied a fixed exchange rate for the 15-year supply period with no indexation.
Motie is also introducing more flexibility for participants that need to shift power output between years because of "unavoidable reasons such as planned preventive maintenance".
It remains to be seen if these changes will be enough to drive more successful participation. Industry participants had called for several other changes, including a higher ceiling price.
As in the first round, successful bidders would have a three-year preparation period, meaning power supply would have to begin in late 2028-early 2029. This would be later than for the first round, but could still limit the number of potential suppliers as not many suitable projects will be up and running by then.
Supply will have to conform with South Korea's clean hydrogen standard ,which sets a threshold of 4kg CO2 equivalent/kg of hydrogen. In the first round, bids were only made based on ammonia supply made from natural gas with carbon capture and storage (CCS), according to industry participants.
Projects will be evaluated 60pc on price and 40pc on other criteria, such as the emissions intensity of supply.
Motie today also opened another round for its general hydrogen power-generation bidding market. This has no emissions threshold and is open to fossil-based hydrogen with unabated emissions and byproduct hydrogen.
It aims to support 1.3 TWh/yr of power generation from 2027, including through fuel cells.
Bids can be submitted until 4 July, with winners to be announced in August, Motie said.
