The Department of Energy (DOE) has issued rules governing the conduct of a mid-merit natural gas capacity auction, as the Philippines seeks to strengthen energy security and support the integration of renewable energy into the country’s power system.
Under Department Circular No. DC2026-06-0013, signed by Energy Secretary Sharon Garin and seen by Renewable Energy Philippines, the DOE prescribed the policy framework and implementing guidelines for the Mid-Merit Natural Gas Capacity Auction (MMNGCA), a mechanism designed to procure additional natural gas-fired generating capacity through a competitive process.
The department said the policy is intended to “provide a transparent, competitive and reliable mechanism for the procurement of mid-merit natural gas-fired power generation capacity” and promote investments in natural gas infrastructure while ensuring adequate electricity supply.
The circular forms part of the government’s broader energy transition strategy, under which natural gas has been identified as a transition fuel that can complement the increasing share of variable renewable energy sources such as solar and wind.
According to the DOE, the policy seeks to ensure the “availability of adequate, reliable, and affordable power supply” while facilitating the development of the country’s natural gas industry.
The department has previously said that indigenous and imported natural gas will play an important role in the country’s energy mix, particularly as the Philippines works toward achieving a renewable energy share of 35% by 2030 and 50% by 2040.
Mid-merit generating plants generally operate during periods of intermediate electricity demand and provide operational flexibility to the grid by adjusting output in response to changing supply and demand conditions.
Such flexibility is increasingly viewed as important as more intermittent renewable energy projects are connected to the transmission system.
The circular provides the framework for the conduct of the auction and outlines the responsibilities of various government agencies and participating entities involved in the procurement process.
The DOE said the auction mechanism aims to encourage investments in natural gas-fired power generation through a competitive and transparent market-based approach.
The policy is also intended to support the implementation of the Philippine Natural Gas Industry Development Plan, which seeks to establish a sustainable and competitive natural gas industry capable of enhancing the country’s energy security and economic growth.
The department noted that the development of natural gas resources and infrastructure is expected to contribute to a more diversified energy portfolio while supporting the country’s transition toward a lower-carbon energy system.
The issuance of the circular comes as the Philippines continues to expand renewable energy capacity through the Green Energy Auction Program and other policy initiatives designed to accelerate investments in solar, wind, hydro and geothermal projects.
As renewable energy penetration increases, policymakers have identified the need for flexible and dispatchable generation resources that can help balance fluctuations in power supply and maintain grid stability.
The DOE has described natural gas as a transition fuel that can provide such balancing capability while supporting the country’s broader decarbonization objectives.
The circular takes effect following its publication and provides the regulatory framework for the conduct of future Mid-Merit Natural Gas Capacity Auctions, which the DOE expects will contribute to a secure, reliable and resilient energy system while complementing the growth of renewable energy in the Philippines.