Abstract

This paper presents a procurement auction mechanism for the Korean clean hydrogen power generation auction market, addressing the limitations of the existing auction design. We design a multi-attribute auction framework with a Vickrey-score sealed-bid auction rule consisting of scoring, allocation, and payment rules, allowing sellers to bid on both price and non-price attributes. We adopt the hydrogen co-firing rate and capacity factor as non-price attributes to comprehensively evaluate the contributions to greenhouse gas reduction and fuel supply reliability. Through equilibrium analysis, we demonstrate that the proposed mechanism induces a weakly dominant bidding strategy for sellers. This strategy leads to optimal price bids based on their levelized cost of energy (LCOE) and independently determined non-price attributes. Numerical analysis using real-world parameters from the Korean hydrogen industry highlights the importance of carefully structuring the score function. Moreover, the results confirm that the proposed auction mechanism achieves higher market efficiency and a greater share of clean hydrogen in fuel usage compared to single-attribute price-only auctions.