DOE eyes non-auction purchase of backup power
By Brix Lelis – April 2, 2025 | 12:00am
from The Philippine Star
The DOE is soliciting comments from the public for a draft circular outlining the supplemental framework for the procurement of ancillary services (AS), or backup power that maintains balance and stability in the national grid.
MANILA, Philippines — The Department of Energy (DOE) may soon allow the National Grid Corp. of the Philippines (NGCP) to secure power reserves even without conducting a competitive bidding.
The DOE is soliciting comments from the public for a draft circular outlining the supplemental framework for the procurement of ancillary services (AS), or backup power that maintains balance and stability in the national grid.
Under the proposed guidelines, the system operator (SO) may “directly negotiate” with eligible AS providers without the need for a competitive selection process (CSP), subject to DOE approval.
However, this may only be allowed if there is an insufficient supply of power or any types of AS in the reserve market, grid or sub-grid that could threaten the reliability or the availability of power supply.
The direct negotiation of ASPAs or AS procurement agreements will also be possible whenever there is a sustained increase in the cost of providing AS in the grid or sub-grid for six months.
“All ASPAs directly negotiated by the SO… shall authorize the SO to immediately implement these ASPAs by virtue of the directive or approval of the DOE, without prejudice to the evaluation and final decision of the Energy Regulatory Commission (ERC) on the application for the approval of such ASPAs,” the draft circular states.
The SO and AS provider, in turn, will be required to jointly seek ERC approval for their directly negotiated ASPA within 15 days from the execution.
The draft circular also outlines the terms and conditions for directly negotiated ASPAs, specifying that the duration of the agreement shall not exceed five years, and it cannot be renewed or extended.
Any provision for cost increase, acceleration or escalation, meanwhile, will be subject to ERC approval.
AS, commonly referred to as reserves, support the transmission of capacity and energy from resources to loads while maintaining the stability of the system.
As the sole buyer of reserves, the NGCP is currently required to conduct a CSP to secure AS contracts from qualified providers.
Under existing rules, all AS contracts “shall be entered into by SO in accordance with the competitive procurement mechanisms.”
The NGCP has yet to respond to The STAR’s request for comment regarding the draft circular.
