Korea: the first CHPS auction – only 750 GWh of 6500 GWh awarded

The first-ever Clean Hydrogen Portfolio Standard (CHPS) auction in South Korea ended with only 750 GWh a year being selected, even though 6500 GWh was offered. According to the Ammonia Energy Association, the state-owned company Korea Southern Power (KOSPO) was selected as preferred bidder; it announced the news in a statement of 22 November 2024, and the auction results were announced in a December release from the power market operator (Korea Power Exchange). The media described the auction as the “world's first” for low-carbon hydrogen power.

How CHPS works

CMS and CSIRO explain that under CHPS the Ministry of Trade, Industry and Energy launched in May 2024 a tender market in which power generators can enter into 15-year power purchase contracts for electricity from hydrogen or ammonia. Only hydrogen meeting the national clean hydrogen standards was admitted (emissions of up to 4 kg CO₂eq per kg H₂). The tender volume for 2024 was 6500 GWh, and commercial operation is to start by 2028. According to the AEA, the mechanism is a contract for difference that equalises the difference between the wholesale electricity price and the LCOE of power from hydrogen or ammonia; if it succeeds, the share of hydrogen and ammonia power in the national grid is to rise to 2.1% in 2030 and 7.1% in 2036. Earlier, in December 2023, the Korean clean hydrogen certification system was finalised (a separate article).

Auction result

The AEA reports that, of the five finalists (all of whom intended to use ammonia co-firing), only KOSPO's bid fell within the price limit set by the market operator KPX. The bid accounted for only 11% of the volume intended for subsidy in the first round, so changes will be needed in subsequent rounds. KOSPO committed to generating 750 GWh a year from 2028 from co-firing ammonia with coal at unit 1 of the Samcheok Bitdream power plant. In July 2024 Samsung C&T was awarded a contract to build an adjacent ammonia import terminal with a tank of 30,000 t capacity, due for completion in July 2027, which will enable co-firing of at least 20% ammonia. The fuel is to come, among others, from the Mid West Clean Energy Project in Western Australia (up to 1.2 million t of ammonia a year with CCS).

Significance

The discrepancy over the length of the contracts (15 years in CMS, CSIRO and Asia Economy, 20 years in some reports) is settled in favour of 15 years. Co-firing ammonia with coal is climate-controversial because it extends the life of coal-fired power plants; CSIRO notes that from 2026 co-firing ammonia with coal has been excluded from eligibility to take part in the clean hydrogen power tender. For biogas and biomethane, which can be produced locally from waste, the CHPS result is a signal that local projects may be more predictable than large import chains – although their scale is determined by the available waste.