Korea Southern Power selected as final bidder in national clean power auction

Ammonia to be imported for co-firing

Korea Southern Power (KOSPO) has been selected by the South Korean government as the preferred final bidder in the first auction conducted under the Clean Hydrogen Portfolio Standard (CHPS). Using a contracts-for-difference mechanism, the scheme will bridge the gap between the wholesale electricity price and the LCOE for electricity produced by hydrogen (or ammonia). The compensation program was set up as a direct market intervention from the government, which will purchase a fixed amount of hydrogen (or ammonia) derived electricity each year. If successful, this will increase the share of hydrogen and ammonia-generated electricity in South Korea’s national grid to 2.1% in 2030, followed by 7.1% in 2036.

From a group of five finalists (all of whom reportedly intend to deploy ammonia co-firing), only KOSPO’s bid came under the price cap set by KPX, Korea’s electricity market operator. The bid represented only 11% of the total generation volume on offer to be subsidised in this first auction, and changes will need to be made for future rounds.

Korea Southern Power’s selection as the preferred negotiating partner for CHPS is a signal signaling the transition to a hydrogen economy. Going forward, Korea Southern Power Company will continue to contribute to achieving the 2030 NDC through a wise transition to the era of carbon-free energy. We will lead domestic clean hydrogen development by continuously expanding clean hydrogen power generation in the future, while solidifying our position as a first mover leading the global carbon-free energy market.

Shim Jae-won, Vice President of Technology and Safety at Korea Southern Power Company in his organisation’s official press release, 22 Nov 2024

At the KOSPO owned and operated Samcheok Bitdream Headquarters power plant, ammonia will be co-fired in Unit 1. From 2028, KOSPO has committed to producing 750GWh of ammonia-coal co-fired electricity, though a co-firing % and fuel volume has not been given at this stage.

As for the source of the fuel, KOSPO is already involved in a consortium supporting development of the Mid West Clean Energy Project, which will produce up to 1.2 million tonnes of CCS-based ammonia per year in Western Australia. The project is led by Australia-based Pilot Energy, who were recently pre-approved by the Korean Energy Economics Institute to supply ammonia under the CHPS hydrogen certification scheme. KOSPO and its consortium partners recently secured more than $1 million in funding from the Korea Export-Import Bank for feasibility work on the Mid West Clean Energy Project.

We plan to complete all permits by 2026 and start construction in 2027. Through this project, we will stably and economically secure clean fuel for coal-fired co-generation through the production and introduction of clean ammonia in 2029.

Won-ho Maeng, Director of New Growth Business Division at Southern Power in his organisation’s official press release, 13 Nov 2024