DOE plans auction for mid-merit natural gas capacity
The Department of Energy (DOE) plans to conduct a bidding process for mid-merit natural gas capacity to support gas-fired power generation as a transition fuel, especially as more renewable energy plants come online.
In a draft circular, the agency said it was “necessary” to launch an auction for additional natural gas capacities to address the projected rise in electricity demand and system reliability requirements, particularly in the Visayas, Mindanao and off-grid locations.
Mid-merit capacity provides the additional electricity needed on the grid to manage the fluctuating demand throughout the day. In particular, mid-merit generators are deployed when demand is more than the so-called base load or the usual minimum.
Based on its simulation of the average daily load profile covering 2023 and 2025, the DOE saw “system flexibility constraints” across the grid network.
The DOE said that in Luzon, coal-fired power plants are being forced to run beyond their operating limits because there are not enough natural gas facilities to supply the mid-merit capacity.
As coal-fired plants are overstressed, the DOE said the facilities are vulnerable to forced outages.
For the other two main grids, the Visayas and Mindanao, the DOE said that since there is no natural gas-fired power generation there, these grids rely on coal and oil-based power.
“Taken together with the dispatch conditions in Luzon, this underscores the need to ensure an adequate and reliable supply of natural gas capacity to support system flexibility, improve dispatch efficiency and enable natural gas to fulfill its intended transition role,” it said.
Natural gas has long been considered a “critical” component of the shift to clean energy.
