In 2024, Korea conducted the world’s first tender for power generated utilizing clean hydrogen. Korea Southern Power (“KOSPO”) was awarded as the sole winner in the tender and successfully concluded the long-term Clean Hydrogen Power Purchase Agreement.

KOSPO participated in the tender, securing competitively priced clean hydrogen through its own bidding process and a series of negotiations. After being selected as the sole preferred bidder in the tender, KOSPO successfully concluded the long-term Clean Hydrogen Power Purchase Agreement following negotiations with the Korea Power Exchange (the supervising body) and power offtakers.

Kim & Chang acted as the legal counsel for KOSPO, advising on all aspects of the transaction, and assisted KOSPO with the fuel supply risk analysis and the drafting and negotiating of the Clean Hydrogen Sale and Purchase Agreement as well as the Clean Hydrogen Power Purchase Agreement.

Korea’s 2024 tender for Clean Hydrogen Portfolio Standard (“CHPS”), is the world’s first tender to secure and trade industry scale electricity generated from clean hydrogen as fuel. The tender is unprecedented and, as a result, the power purchase agreement for this market is a new type of agreement, presenting a unique set of risks. Moreover, in order to participate in the tender, it was essential for our client to finalize a sale and purchase agreement for clean hydrogen as fuel on a parallel track. Given that global clean hydrogen projects are still in their nascent stages, they carry a high level of development risk, creating a pressing need for measures to hedge various uncertainties regarding the clean hydrogen sale and purchase agreement.

In the world’s first Clean Hydrogen Power Market, KOSPO was selected as the sole awardee and entered into the Clean Hydrogen Power Purchase Agreement, while simultaneously finalizing the Clean Hydrogen Sale and Purchase Agreement with a clean hydrogen supplier. These agreements are expected to serve as pioneering precedents, establishing themselves as a form of guidance or standard in future transactions.