Measures to boost energy security helped reduce prices in wholesale market: Gan Kim Yong

The average Uniform Singapore Energy Price in Q2 of this year is lower than in Q4 of 2021, said Minister for Trade and Industry Gan Kim Yong. ST Photo/Ariffin Jamar

From The Straits Times

SINGAPORE – Measures taken by regulator Energy Market Authority (EMA) to boost Singapore’s energy security since October 2021 have helped to push down the wholesale electricity price, which changes every half hour.

Minister for Trade and Industry Gan Kim Yong said in a written reply to a parliamentary question on Monday (July 4) that the average Uniform Singapore Energy Price – which refers to the half-hourly energy price in the Singapore wholesale electricity market – in the second quarter of 2022 was about $300 per megawatt hour (MWh).

This works out to be about 30 cents per kilowatt hour (KWh)

This is down from the average price of $440/MWh (or 44 cents/KWh) in the fourth quarter of 2021, the period when global energy prices started to spike due to growing demand for energy for heating in the cooler months, and ramped up economic recovery.

Figures from EMA’s website showed that the average half-hourly energy price for the third quarter of 2021 was about $153.07/ MWh (or 15.3 cents/kWh).

In October last year (2021), EMA said it would take steps to boost the country’s energy security amid the global supply crunch.

This includes the establishment of a standby liquified natural gas facility, which is essentially a stockpile of the fuel, that generation companies (gencos) can draw from to generate electricity in the event of disruptions to their natural gas supplies.

“We also required gencos to bolster their own stockpile of fuel and empowered EMA to direct the gencos to generate electricity using gas from the (facility) if there are potential shortages,”Mr Gan said.

He was responding to Ms Poh Li San (Sembawang GRC), who wanted to know how Singapore was ensuring the reliability and affordability of its electricity supply.

It is mainly the large electricity users in Singapore, such as shopping malls and manufacturing facilities, that are affected by the fluctuations in the wholesale market.

Currently, such users, which have an average monthly consumption of at least 4,000kWh – about 10 times the average monthly consumption of a four-room Housing Board flat, can only buy electricity from retailers, or from the wholesale market – where electricity prices fluctuate every half-hour.

But the volatile gas and electricity prices, and risk of piped natural gas disruptions, had limited the retailers’ ability to offer fixed price contracts. A number of independent electricity retailers have also exited the market since the global energy crunch.

Households, however, are cushioned from this as they have the option of buying electricity from grid operator SP Group at the regulated tariff, which is currently at 32.28 cents per kWh including the goods and services tax.

To cushion the impact of the fluctuations in the wholesale market to large electricity users, EMA in December 2021 introduced the Temporary Electricity Contracting Support Scheme, which allows businesses to buy electricity at fixed prices.

“For businesses who want greater certainty, EMA has been working with electricity retailers and gencos since January 2022 to offer longer-term fixed price plans of up to three years,” Mr Gan added.

With the global energy crisis exacerbated by Russia’s invasion of Ukraine, EMA has extended these measures until March 31 next year (2023), Mr Gan said.

But while the authorities will continue to monitor the situation and consider if further extensions or measures are needed, Mr Gan said companies should become more energy efficient to manage business costs.

Companies can monitor their half-hourly electricity usage on the SP Utilities Portal or Open Electricity Market e-services portal to manage and reduce their electricity consumption, Dr Tan said, or tap on the various support measures to enhance their energy efficiency.

This includes the recently announced Energy Efficiency Grant for the food manufacturing, food services, and retail sectors; the National Environment Agency’s Energy Efficiency Fund, the Building and Construction Authority’s Green Mark Incentive Scheme and EnterpriseSG’s Enterprise Sustainability Programme.

“Businesses which need financing support can also tap on EnterpriseSG’s programmes such as the Enterprise Financing Scheme and the Temporary Bridging Loan. The Small Business Recovery Grant will also help eligible firms in sectors most badly affected by Covid-19 cope with overall higher costs of doing business,” Mr Gan said.

Malaysia’s ban doesn’t affect import of renewables from Laos

Separately, Mr Dennis Tan (Hougang) asked if Malaysia’s ban on renewable energy exports will prevent Singapore from importing renewable energy from other countries in the region.

Mr Gan said it would not. He said Malaysia’s decision to disallow the export of renewable energy to Singapore does not extend to the passage of electricity from other countries, through Malaysia, to Singapore.

The Republic on June 23 began importing renewable energy from Laos via Thailand and Malaysia – a move that marks the first multilateral cross-border electricity trade involving four Asean countries and the first renewable energy import into Singapore.

Up to 100 megawatts (MW) of hydropower from Laos will be brought into Singapore using existing interconnectors under the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project – an intergovernmental project set up in 2014 to study the feasibility of cross-border power trade.

The 100MW account for about 1.5 per cent of Singapore’s peak electricity demand in 2020 and could power around 144,000 four-room Housing Board flats for a year.

“Malaysia and Singapore have been working closely at bilateral and multilateral platforms on our decarbonisation efforts,” Mr Gan said.

“There is significant benefit for all countries involved, as cross-border electricity trade will encourage investments in renewable energy production as it can serve a broader regional market.”

Mr Gan said Singapore is having collaborative discussions with regional and global partners, including Malaysia, to advance mutual and collective interests.

Author: Audrey Tan