The literature prize is to be awarded to someone who can directly or indirectly be compared with Hans Christian Andersen.
Rowling will travel to Odense in October 2010 to attend the award ceremony in person. The city is very excited about her coming visit for a special reason:
The city already has a strong link to Rowling’s books and hosts an annual Harry Potter Festival, which transforms the City Hall into Hogwarts School for witches and wizards. The festival is run in conjunction with the public library to encourage children to read.(The rest of the article can be read HERE.)
This isn't the only HCA award, for instance, there is the Hans Christian Andersen Medal that's often called the "Little Nobel Prize" and is awarded to a writer and an illustrator bi-annually. You can find details on the 2010 nominees for that HERE.
As far as I can tell, the award Rowling will receive is the first of its kind but there's no doubt its a great honor.