[Energy Odyssey]⑦Hyundai Motor's Ambitious Vision in Saemangeum... Can Hydrogen Become the Energy Source of the Future?

Ⅱ. Overcoming the Energy Crisis through Technological Innovation

[On the Ground] Hyundai Motor Group Integrates Renewable Energy, Hydrogen Production and Utilization in One Location

Korea South-East Power Launches Korea’s First Hydrogen Powe

Editor's NoteAmid recent supply chain crises caused by the war in the Middle East and government-led megaprojects, the importance of energy is greater than ever. With Korea relying on overseas sources for most of its primary energy, we face the challenging task of achieving energy security, carbon neutrality, and economic growth all at once. This special series features journalists on the ground in the energy sector, exploring current issues and searching for alternatives, with insights from both government and industry.

Aerial view of Saemangeum Industrial Complex 1, Sector 7. Hyundai Motor's AI Data Center, robot production plant, and hydrogen plant are scheduled to be established here. Photo by Heejong Kang

On the 21st, upon entering Sector 7 of Saemangeum Industrial Complex 1 located in Gunsan, North Jeolla Province, a vast open area came into view. Completed in 2024, this area spans 574,000 square meters (approximately 173,635 pyeong), about the size of 80 soccer fields. Sector 8, adjacent to Sector 7, is also undergoing significant land reclamation work.

Currently, Sector 7 is empty, but beginning next year, it is set to transform entirely. Hyundai Motor Group plans to invest KRW 9 trillion in Saemangeum to establish an AI data center, a robot manufacturing plant, and a hydrogen plant.

Since Hyundai Motor Group decided to make a large-scale investment in Saemangeum, the region has become increasingly vibrant. This marks a major turning point for Saemangeum, 35 years after the start of seawall construction in 1991.

The Saemangeum Development and Investment Agency plans to revise its master plan in line with Hyundai Motor Group's investment. According to the draft revision of the master plan, released publicly by the agency in August, the area of industrial land—where factories and research facilities can be established—will expand to 37.5 square kilometers, 2.1 times larger than at present. The number of key industrial hubs, currently centered around Complex 1, will also increase to four.

KRW 2.3 Trillion Investment: Large-scale Solar and Green Hydrogen Facilities

More significant than anything is the dramatic increase in land designated for the development of renewable energy infrastructure such as solar and wind power. The Saemangeum Development and Investment Agency plans to convert areas with deep waters that are costly to reclaim or that are unsuitable due to airport noise, into energy land rather than landfill. The agency also decided to convert Agricultural and Life Land, Sector 3, into energy land.

This major expansion of energy land is closely linked to Hyundai Motor Group's hydrogen investment. Hyundai Motor Group plans to begin construction of a 200-megawatt (MW) water electrolysis plant in 2027 to produce green hydrogen. If a facility is rated at 200 MW, it means it uses 200 MW of electricity every hour. The total investment is KRW 1 trillion.

Green hydrogen refers to hydrogen produced by electrolyzing water with renewable energy, such as solar or wind power. Because it generates no carbon dioxide during production, it is a clean energy source. The facility used to produce green hydrogen is a water electrolysis plant.

For the water electrolysis plant, Hyundai Motor Group plans to mass-produce proton exchange membrane (PEM) electrolyzers at its new hydrogen fuel cell plant in Ulsan, scheduled for completion in 2027. Since water electrolysis uses the reverse reaction of fuel cells (which produce electricity from hydrogen), it is possible to use shared parts. Hyundai Motor Group explains that it has achieved a localization rate of over 90% for these components.

Hyundai Motor Group plans to directly build a solar power plant in Saemangeum to supply electricity to its water electrolysis plant. From 2027, the company will invest KRW 1.3 trillion to construct a gigawatt (GW)-scale solar power facility in Saemangeum by 2035. Including the solar plant and water electrolysis plant, securing green hydrogen production facilities alone will require an investment of KRW 2.3 trillion.

Constructing a GW-scale solar power facility requires an enormous amount of land. Typically, 3 pyeong of land are needed to install 1 kilowatt of solar panels. Based on this calculation, a 1 GW solar power plant would require about 3 million pyeong (about 9.92 square kilometers) of land. Hyundai Motor Group is reportedly planning to build both onshore and floating solar power plants.

According to the Saemangeum Development and Investment Agency, some sections of Agricultural and Life Land Sector 3, the area east of the Saemangeum International Airport, and part of the second phase of floating solar sites will be used as solar sites for Hyundai Motor Group. All of these are located near Sector 7, where the hydrogen plant will be built.

Using Agricultural and Life Land Sector 3 could support a 0.7 GW solar power plant, and the area east of the new Saemangeum Airport could accommodate a 0.6 GW facility, according to estimates. This roughly matches Hyundai Motor Group's GW-scale solar power plant plans.

How Is Green Hydrogen Produced Using Renewable Electricity?

The outstanding question is how the electricity produced at the solar power plants will be supplied to the water electrolysis plant. Hyundai Motor Group has not yet provided a concrete plan for this.

Solar power plants are typically only able to produce electricity for three to four hours per day. However, a water electrolysis plant needs a steady 24-hour supply of electricity each day. If Hyundai Motor Group builds a GW-scale solar facility, it will produce more than the required capacity (200 MW) for the water electrolysis plant during daytime hours. But at night, solar electricity is unavailable and the water electrolysis plant cannot operate.

The first solution to this mismatch is to install large-scale energy storage systems (ESS) to store excess electricity generated during the day and use it at night. However, this approach inevitably involves enormous costs.

The energy industry expects Hyundai Motor Group to supply electricity via a direct power purchase agreement (PPA). A direct PPA involves a contract between the electricity user (the company) and the electricity producer (or supplier), bypassing Korea Electric Power Corporation (KEPCO).

Even with a direct PPA, it is possible to connect to KEPCO's grid. This means that if Hyundai Motor Group cannot receive solar power directly, it can use KEPCO's transmission network. By selecting a monthly equalization settlement system, instead of settling according to time of use, even electricity used at night can be accounted for as if it was produced by solar generation, since excess daytime generation is assumed to have been used at night.

For example, if Hyundai Motor Group installs a 1 GW solar plant in Saemangeum with a utilization rate of 20%, the total energy generated in a month would be 144 GWh (1 GW x 720 hours x 20%). In the monthly settlement system, 144 GWh generated in the month is divided by 720 hours, so a contractual capacity of 200 MW of solar power supplied every hour can be allocated for the contract. This matches exactly with the capacity requirements of the planned water electrolysis plant.

Still, one problem remains—whether the electricity generated by the solar power plant can actually be connected to KEPCO’s grid. KEPCO has limited connections at 205 substations nationwide, including 164 in the Honam region, due to infrastructure constraints caused by the rapid increase of solar and other renewables. The Saemangeum region is also subject to these restrictions. According to an official from the Saemangeum Development and Investment Agency, however, "Grid connections for Hyundai Motor Group’s solar facilities have already been secured."

The Test Bed for Korea’s Hydrogen Industry

For the hydrogen industry to develop, production is only the first step. The entire life-cycle ecosystem must be in place, including how the produced hydrogen will be utilized and how to connect production sites with consumers.

The 200 MW water electrolysis plant that Hyundai Motor Group is building can produce an estimated 30,000 tons of hydrogen per year. Experts believe that securing large-scale demand is key. Storage and transportation infrastructure must also be established.

Hydrogen has three main demand sources: power generation, mobility (transportation), and industrial use. Power generation involves using hydrogen fuel cells or hydrogen turbines. In Korea, demand for hydrogen in industrial applications, such as direct-reduced iron making, is expected to increase significantly in the future. Hyundai Motor Group is expected to prioritize using the produced hydrogen in mobility applications, such as trams and buses.

Hyundai Motor Group also plans to invest KRW 400 billion in building an AI Hydrogen City in Saemangeum Waterfront City, currently under construction on a 6.6 square-kilometer (about 2 million pyeong) site set by the government. The concept involves using hydrogen produced at the water electrolysis plant for the AI Hydrogen City.

In response to Hyundai Motor Group’s investment, local governments are also seeking to establish a hydrogen ecosystem. On September 14, North Jeolla Province held the "1st North Jeolla Province Hydrogen Committee 2026" to discuss strategies for building a hydrogen industry ecosystem in conjunction with Hyundai Motor Group’s investment in Saemangeum. North Jeolla Province plans to establish a full-cycle ecosystem, expanding not only green hydrogen production but also storage, transportation, and utilization.

An official from the Saemangeum Development and Investment Agency remarked, "With Buan designated as a hydrogen city and demonstration projects already underway, and with a hydrogen-specialized national industrial complex planned for completion in Wanju, we could tie the hydrogen ecosystem together with Saemangeum."

The hydrogen ecosystem Hyundai Motor Group is creating in Saemangeum will serve as a test bed for Korea’s entire hydrogen industry. The experience gained in Saemangeum could also be leveraged for overseas expansion. Hyundai Motor Group expects that Saemangeum, where renewable energy, hydrogen production, and utilization are all integrated, will provide a foundation to strengthen the global competitiveness of the domestic hydrogen sector.

Korea South-East Power’s Hydrogen Challenge in Saemangeum

About a 30-minute drive by car from Saemangeum Industrial Complex 1, another hydrogen project is underway in Sector 3 (Third Industrial Complex) in Buan County, North Jeolla Province.

"This is the site where a 1 GW solar power plant will be installed. Although it is barren land now, in five to six years, it will be completely transformed." A representative from the Saemangeum Development and Investment Agency pointed to a plot of land, recently reclaimed and dotted with colorful halophyte plants, while giving this explanation during an on-site inspection.

Part of the 3rd zone (3rd Industrial Complex) of Saemangeum. Korea South-East Power plans to build a 1GW-class solar power plant here. Photo by Heejong Kang

Korea South-East Power plans to build a 1 GW solar power plant on a site of about 3 million pyeong in Sector 3, and to establish green hydrogen production facilities and hydrogen-fired power generation facilities on an adjacent 80,000-pyeong site. The plan is to use electricity generated by solar power to produce hydrogen for storage, then use hydrogen turbines to generate electricity again. This would be the first attempt in Korea to operate a hydrogen-fired power plant using domestically produced green hydrogen.

To this end, in August, Korea South-East Power signed a comprehensive memorandum of understanding (MOU) with the Saemangeum Development and Investment Agency to jointly develop the Saemangeum Green Energy Complex. The Saemangeum Development and Investment Agency plans to support the conversion of part of the land in Sector 3, originally designated for tourism and leisure, into industrial land for the hydrogen plant.

Korea South-East Power signed this MOU with the Saemangeum Development and Investment Agency to participate in the government’s Clean Hydrogen Power Generation Supply (CHPS) competitive bidding. The Ministry of Climate and Environment has set this year’s CHPS volume at 500 GWh and is expected to soon announce detailed bidding plans. The government intends to give extra points to projects using green hydrogen produced domestically.

However, if Korea South-East Power fails to win this year’s CHPS bid, its hydrogen investment plan for Saemangeum may fall through. An official from the Saemangeum Development and Investment Agency explained, "The continued progress of the MOU depends on Korea South-East Power's bid results."

"Hydrogen Is a Strategic Resource – Government Needs Policy Consistency for Investment"

In 2020, during the Moon Jae-in administration, Korea became the first country in the world to enact a Hydrogen Act (the Act on Promotion of Hydrogen Economy and Hydrogen Safety Management), setting a vision to become a leading hydrogen nation. However, more than five years after the law took effect in February 2021, Korea’s hydrogen industry still faces many difficulties. Hydrogen prices remain stubbornly high, and the storage and transportation ecosystem is incomplete. While Korea hesitated, China and Europe continued large-scale investments in hydrogen clusters and increased support.

Under the Lee Jae-myung administration, the role of hydrogen in the power generation market has been drastically reduced. Following the 2040 coal phase-out roadmap, the government excluded coal-ammonia co-firing from the clean hydrogen generation market starting this year. The initially announced clean hydrogen bid volume of 3,000 GWh for 2025 has shrunk to 500 GWh this year. Compared to the 6.5 TWh bid announced at the launch of the clean hydrogen market in 2024, this represents a 92% decrease. Even the general hydrogen bidding volume, mainly for fuel cells, has decreased from 1,300 GWh to 930 GWh.

With the sharp contraction of the power generation market, previously the biggest user of hydrogen, concerns and complaints are growing in the hydrogen industry. Experts unanimously stress that policy consistency is essential for the hydrogen industry’s growth.

At the "Korea Academy of Engineering 2026 Hydrogen Economy Grand Debate" held on September 21 at the Kensington Hotel in Yeouido, Hyundai Motor Company Vice President Shin Seung-kyu said, "If companies are to invest in technologies that require decades of commitment, policy must also remain consistent over such long timeframes. If the government provides a steady 'signal' that hydrogen is the energy source of the future, companies will continue to invest."

Experts are calling for the provision of subsidies for domestic clean hydrogen production, as well as for diversifying supply sources overseas. Jin Nam Park, President of the Korea Hydrogen and New Energy Society (professor at Kyungil University), said at the "AI Era Power System Transformation and the Role of Hydrogen" policy forum in August, "We need to support clean hydrogen production facilities with subsidies and establish hydrogen production bases abroad."

Amid energy security concerns driven by crises in the Middle East and major government megaprojects, the strategic value of hydrogen as an energy resource is being newly recognized. Kwang Young Lee, head of the Clean Hydrogen Storage and Utilization Strategy Research Group at the Korea Institute of Science and Technology (KIST), said, "Hydrogen can be sourced from various places overseas and can be produced domestically, so it can be an important pillar of energy security."

Some are also advocating for the use of hydrogen as an ultra-long-term energy storage device to overcome the intermittency of renewables. Dr. Kwang Young Lee said, "A hydrogen energy storage system (H2ESS) can absorb surplus renewable energy to alleviate transmission congestion and provide long-duration flexibility. Leveraging a hydrogen storage and transportation infrastructure can reduce reliance on the conventional transmission grid."

Shin Seung-kyu, Vice President of Hyundai Motor Company, emphasized, "Hydrogen can respond flexibly to the rising demand for electricity driven by the spread of AI and data centers, and, as a clean source of energy, supports carbon neutrality goals through storage, conversion, and use."

This content was produced with the assistance of AI translation services.