Korea's Ministry of Climate, Energy and Environment will cut this year's auction volume for the general Hydrogen Power Bidding Market (HPS) by nearly 30 percent from a year earlier. The ministry will also exclude the coal-ammonia co-firing method from the Clean Hydrogen Power Bidding Market (CHPS).
The ministry said Wednesday it will give legislative notice through the 30th of a "notification on calculating annual purchase volumes for the hydrogen power bidding market" containing these details. The hydrogen power bidding market is a system under which Korea Electric Power Corporation is obligated to purchase electricity produced using hydrogen compounds as fuel. Because awarded volumes must be sold, uncertainty is reduced, creating a structure that encourages private companies to enter the hydrogen industry.
The hydrogen power bidding market is divided into HPS and CHPS depending on the generation method. Clean generation methods that emit 4 kg or less of greenhouse gases per 1 kg of hydrogen produced bid in CHPS, while the rest bid in HPS. Fuel cells, which mainly extract and use hydrogen from liquefied natural gas (LNG), have primarily bid in the HPS market. The coal-ammonia co-firing method, or the method of mixing hydrogen into existing LNG power plants, is mainly handled in the CHPS market.
This year's auction volume is notable for being sharply lower than last year's. HPS market volume was reduced about 28.4 percent year-on-year, from 1,300 GWh (gigawatt-hours) to 930 GWh. The rationale is that most fuel cells bidding in HPS use the "gray hydrogen" method of extracting hydrogen from LNG, which does not align with decarbonization policy. However, since closing the bidding market all at once could cause market disruption, the ministry responded by reducing the volume only partially.
CHPS market volume, which had been opened at 3,000 GWh each year, shrank to 500 GWh, about one-sixth of the previous level. While various clean hydrogen generation methods such as hydrogen co-firing and full-firing can compete in the CHPS market, the decision took into account that the market's realistic volume is not large. In fact, although the CHPS market has announced 3,000 GWh each year since its opening in 2024, awarded volumes amounted to only 750 GWh in 2024 and 500 GWh in 2025.
In particular, the coal-ammonia co-firing method, mainly attempted by coal-fired power plants, will no longer be recognized as eligible for CHPS bidding. The decision reflects a judgment that the coal-ammonia generation method is effectively being used as a means to extend the life of coal power plants.
As a result, the fuel cell industry, which had relied on the HPS market, faces an urgent problem. The government's auction volume originally corresponded to about 175 MW (megawatts) of fuel cells in terms of installed capacity, but this year it has been reduced to around 125 MW. The industry believes that at least 200 MW or more must be supplied domestically each year to maintain industrial competitiveness while also targeting overseas markets. "Fuel cells can later be converted to the clean hydrogen method," an industry official said. "They need to play a priming role until clean hydrogen infrastructure is expanded, but it is difficult if sufficient volume is not supplied."
