DoE planning first auction for gas-fired capacity

THE Department of Energy (DoE) is planning to launch the first auction dedicated to gas-fired power generation, with the aim of raising the proportion of reliable capacity that will support the influx of intermittent clean-energy projects.

“The increasing penetration of variable renewable energy in the national grid necessitates the procurement of flexible mid-merit capacity to manage intermittency, ensuring grid reliability and stability,” the DoE said in a draft circular.

The auction is designed to position natural gas as a “transition fuel” to support the shift to clean and sustainable energy.

Republic Act No. 12120, or the Philippine Natural Gas Industry Development Act, recognizes natural gas as having the potential to meet increasing energy demand and hopes to position the Philippines as a liquefied natural gas trading and transshipment hub.

The law also requires the “transparent and secure procurement” of natural gas, prioritizing the utilization of indigenous natural gas over imported gas and other conventional energy sources.

The DoE said the auction is necessary “in view of the projected power supply-demand outlook and system reliability requirements, particularly in the Visayas, Mindanao, and off-grid areas.”

The Energy Regulatory Commission will set a gas auction threshold price as the ceiling for each auction round, taking into account the cost of building gas facilities, fuel price volatility, and foreign exchange rates.

Winning bidders may opt to finance and construct the necessary transmission facilities in case of delay in the facilities due to be built according to the Transmission Development Plan, or if the grid impact study deems it necessary for the power project. — Sheldeen Joy Talavera