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Singapore

Parliament passes Bill to safeguard Singapore’s energy security and reliability in the long term

SINGAPORE: Parliament passed a Bill on Tuesday (Nov 2) to provide the Energy Market Authority (EMA) with more powers to secure Singapore’s electricity supply, as the country transits to cleaner sources of energy.

EMA will now be able to acquire, build, own and operate critical infrastructure.

These include energy storage solutions, transmission infrastructure and open cycle gas turbines (OCGT), which refer to generation units that can be brought online quickly to augment any shortfall in power capacity.

The existing OCGTs in Singapore are more than 30 years old and are “long overdue” for replacement, said Second Minister for Trade and Industry Tan See Leng in Parliament. 

“These quick response units are necessary for the security and reliability of our electricity system. However, there is little private sector interest to build these units as they are less competitive compared to Combined Cycle Gas Turbines,” he said, adding that the amended law will allow EMA to step in to build OCGTs.

Where needed, EMA will also be able to directly operate the critical infrastructure or set up a subsidiary to do so.

Under the Energy (Resilience Measures and Miscellaneous) Bill, EMA’s borrowing powers will be expanded, allowing it to issue bonds, in addition to borrowing through commercial or government loans, to finance the construction of critical infrastructure.

Noting concerns from power generation companies about the impact of EMA’s new powers on electricity prices and market competitiveness, Dr Tan gave the assurance that the agency will explore alternative solutions before stepping in to provide the required critical infrastructure. 

“This amendment is worded broadly to provide EMA with the flexibility to react to the wide range of scenarios which may undermine the security, stability and reliability of our energy sector,” said the minister. “Our preference is for the private sector to build, own and operate the electricity infrastructure.”

He added that EMA will put safeguards in place to ensure that it does not compete unfairly against private generation companies.

For example, EMA may set up a separate subsidiary to own and operate a generating unit, and will put in place proper procedures and governance structures to mitigate any conflict of interests, Dr Tan said.

Other amendments include enhancing the protection of critical electricity and gas infrastructure by making it an offence to damage protective infrastructure housing cables or pipelines such as cable tunnels.

ENERGY SECURITY AND RESILIENCE

During the debate on the Bill, several Members of Parliament, including Mr Melvin Yong (PAP-Radin Mas) and Mr Gerald Giam (WP-Aljunied), raised concerns about the Open Electricity Market, following the recent exit of several energy retailers.

Over the past three weeks, iSwitchOhm EnergyBest Electricity, UGS Energy and SilverCloud Energy have pulled out of the market, citing volatile market conditions after a spike in wholesale energy prices.

According to Dr Tan, these five retailers had supplied electricity to about 9 per cent of all consumers, including both residential households and commercial users.

He reiterated that the Open Electricity Market remains viable, adding that the Government is “very, very mindful” of the higher electricity bills that households and businesses will face.

The Government has been providing targeted assistance, he said, including U-Save rebates to help lower- and middle-income families with utility expenses, as well as programmes to raise awareness of electricity conservation.

Dr Tan said his ministry, together with the Ministry of Finance, is monitoring electricity prices in Singapore and looking into whether further assistance is needed for affected households and businesses.

In the long term, Singapore has taken measures such as diversifying its energy sources and developing low-carbon alternative to ensure its energy security, he said.

Last month, the country said it intends to import up to 30 per cent of its electricity supply from low-carbon sources by 2035, and announced a slew of trials with other countries to prepare for electricity imports.

Singapore has also pledged to quadruple its solar capacity to at least 2 gigawatt-peak (GWp) by 2030, as it looks to cleaner sources of energy.

Dr Tan said that as Singapore starts to import electricity and harness more solar energy, it needs to have sufficient amounts of other types of backups, including energy storage systems and generators, to ensure energy security.

Currently, power generation companies are required to stockpile at least 60 days of fuel reserves, in the event of disruptions to Singapore’s natural gas supply.

He said the Government will work with the private sector to build the necessary infrastructure to diversify and to secure the country’s energy supply.

In the event that the private sector fails to do so, the updated law will allow EMA to step in and provide the adequate infrastructure.

Last week, EMA and SP Group announced that they are developing a “digital twin” or a computer replica of its power grid assets and network, to improve the reliability of its electricity supply and support the deployment of cleaner energy sources. 

REDUCING GREENHOUSE GAS EMISSIONS

MPs also highlighted the need for the power sector to decarbonise, with the sector currently accounting for about 40 per cent of the country's carbon emissions.

Under the new law, EMA will be able to implement standards and policies which could require the companies to reduce the amount of greenhouse gas emissions they produce and spur the use of more energy and carbon-efficient technologies.

Mr Liang Eng Hwa (PAP-Bukit Panjang) suggested that EMA can look at more targeted measures to move the sector towards lower emissions, instead of using the powers derived from the Bill to institute more broad-based measures.

He added that with the progressive build-up of the four supply “switches” and diversification of the various energy sources, the regulations and the development of the sector would also need a more differentiated approach.

Meanwhile, Mr Louis Ng (PAP-Nee Soon) asked if MTI would commit to setting an aggressive timeline for releasing EMA’s policies, given that power generators will need time to adapt to any new regulations.

In response, Dr Tan said the first iteration of the proposed measures may be released for public consultation as early as next year.

In developing greenhouse gas emission standards, Dr Tan said EMA will ensure that they are reasonable and realistic but also ambitious.

“Companies will be given time to transition and the public can monitor our progress in decarbonising the power grid via the grid emissions factor report which EMA publishes on its website every year,” he added.

IMPACT OF ENERGY TRANSITION ON ELECTRICITY PRICES

Mr Saktiandi Supaat (PAP-Bishan-Toa Payoh) and Mr Desmond Choo (PAP-Tampines) raised concerns over the impact of Singapore’s energy transition on electricity prices.

Dr Tan said while the cost of generation will be lower, infrastructure enhancements in the form of additional landing sites, subsea interconnections as well as backup and grid enhancements will add to overall costs.

“This is an inevitable and necessary trade-off to address climate change,” he said. “EMA will continue to work closely with industry partners to explore and develop cost-competitive and secure solutions that will meet both our long-term energy needs and low emission targets.”

“At the same time, the Government will continue to provide targeted support for vulnerable to help them cope with higher electricity costs,” he added.

Source: CNA/vl(gs)

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