The Philippine Department of Energy is offering about 3.8 GW of mid-merit natural gas capacity across Luzon and the Visayas in the country's first auction of its kind, aimed at providing flexible capacity as renewable generation expands, Manila Bulletin reported on September 15.

Mid-merit capacity is the electricity to be injected into the grid to manage fluctuating demand through the day. Energy Undersecretary Mario Marasigan said the technology will support renewable energy by filling gaps when solar and wind output declines.

The auction comprises two classes, one for existing plants and one for new builds. For Luzon, 2.9 GW is on offer, with 1.4 GW targeted for delivery this year, another 500 MW by 2027 and 1 GW from new builds by 2031.

For the Visayas, particularly Cebu and Panay, 940 MW is being offered with delivery targeted between 2028 and 2031, including 440 MW of LNG mid-merit plants from 2028.

Energy Secretary Sharon Garin said in July that contracts may be awarded in the fourth quarter. She said gas-fired plants are the most suitable mid-merit facilities because they ramp and down without damage and respond faster than coal, while being cheaper than diesel.

The Energy Regulatory Commission has yet to release the final Gas Auction Threshold price, which will allow bidders to submit offer quantities and prices. The auction will cover natural gas assets that are newly developed, upgraded or already part of the Wholesale Electricity Spot Market.