Singapore's draft power rules indicate increased state control in energy transition


Senoko Power Station in Singapore. (Photo: Wikimedia Commons)

Six years ago, Singapore fully opened its national electricity market, concluding a reform process that began in the 1990s, making it the first in Asia to do so. Today, residents and businesses can choose from various subscription plans offered by a few competing retailers to access cheaper and cleaner power.

Recently, regulators have indicated a need for increased state control, even as they continue to welcome private utility companies. The Energy Market Authority (EMA) announced last week its intention to regulate access sharing for critical infrastructure and review plans when owners of significant power assets intend to repurpose their properties.

Singapore prepares for energy crisis

Additionally, the EMA seeks the authority to implement emergency power rationing and collect fees for new market development and decarbonization initiatives. Part of Singapore’s strategy to centralize fuel procurement involves setting minimum natural gas contracting obligations for power generators to ensure adequate stocks. Public feedback on these proposals is invited until early June.

Observers suggest these measures indicate Singapore is preparing for worst-case scenarios, transitioning from three years of power price volatility to dealing with clean power imports, erratic global climate patterns, and geopolitical instability.

They also note that Singapore may be trying to manage its clean energy transition carefully, amid growing financial opposition to fossil fuels.

Renewables bring intermittency risks

“There’s an increasing level of control and influence over the market. These measures are largely about building emergency resilience,” said David Broadstock, senior research fellow at the National University of Singapore’s Sustainable and Green Finance Institute.

The proposal for power rationing, which the EMA describes as a “last resort,” is seen as a significant emergency safeguard. Analysts said that while this could fill a regulatory gap, it also points to more future risks.

For example, increased use of renewables will bring intermittency risks, and geopolitical issues could disrupt future clean electricity imports from neighboring countries, even if regional relations are currently stable, Broadstock said.

Suryagen Renewable Energy's Solar PV plant in Batam, Indonesia. Singapore’s Tuas planned to import a total of 600 MW green energy in Batam. (Photo: Suryagen Renewable Energy)

He added that international gas supply remains vulnerable to shocks like harsh winters, which could see Europe and China securing fuel shipments that Singapore depends on for electricity. Since 2021, Singapore has experienced significant increases in power prices due to disruptions in gas markets caused by Covid-19 recovery and the Russia-Ukraine war, leading some power retailers to collapse.

While the EMA has not detailed how power rationing would work, it referenced French and German regulations in its public consultation. Both countries prioritize cutting power to industries before households to prevent residents from freezing in winter.

Proposals may restrict free power market

Analysts view the proposal requiring utilities to seek permission before repurposing critical assets as a defense against stakeholder pressure leading to the premature closure of Singapore’s gas plants. Currently, eight gas plants provide over 95% of the city-state’s electricity, with more units under construction.

“If I’m a private company with gas power, my stakeholders might urge me to divest and exit the gas market. As a company, that’s a choice I’d seriously consider,” Broadstock said. Government support for keeping power plants operational as critical assets could help mitigate such pressures.

EMA’s proposal underscores Singapore’s limited fuel alternatives and the continued need for gas-based power for the foreseeable future, he added.

Despite the energy security risks, there are concerns that the new proposals could excessively restrict Singapore’s free power market.

“There’s a risk of pushback, with companies feeling they can’t compete effectively,” said Marc Allen, energy consultant and co-founder of Singapore climate-tech firm Unravel Carbon. He suggested that the government should moderate its approach with recommendations and intervene only when businesses cannot align.

The EMA emphasized that many of its proposals are contingency measures. Powers to direct and arbitrate infrastructure access sharing agreements will only be used when necessary for public interest in energy security and reliability, it said.

An EMA spokesperson said that such measures could include facilitating access to existing switch-houses and jetties for power importers when building new infrastructure is impractical or costly due to land shortages.

Source: Eco-Business

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