Singapore electricity sector to see shake-up with full liberalisation

Singapore electricity sector to see shake-up with full liberalisation

THE future of Singapore's electricity sector is starting to take shape as
the country approaches the last leg of a long journey in the liberalisation
of the market.

With 25 electricity retailers slugging it out for a pie of the market that
will be fully liberalised next year, the range of new services they will
offer - by tapping various new technologies and new business models - will
no doubt bring immense benefits to end-consumers.

To keep up, however, the Energy Market Authority (EMA) will have to redraw
some of the current regulations. And given how incumbent power generation
companies have warned that the current market situation is unsustainable and
posing severe financial strain for them, it will also have to keep a
watchful eye on the market.

The full liberalisation of the market has been a long time coming. Since
2001, steadily more consumers have been handed the freedom to switch from
buying electricity at the regulated tariff from SP Services to buying from
an electricity retailer which offers packages with different price plans.

At the moment, only consumers using above two megawatt-hour (MWh) - mainly
industrial and commercial consumers - can do so; another 1.3 million
consumers, mainly households, will enjoy this flexibility by the second half
of 2018.

Ahead of this, the number of electricity retailers has surged, from seven in
2013 to the current 25 - a number that continues to grow.

It has also changed the way incumbents operate here.

For instance, Sembcorp Industries, which is in the midst of a strategic
review after new CEO Neil McGregor arrived at the group, has signalled its
intent to move into the solar space in Singapore through a recent S$3.3
million acquisition of two operating rooftop solar facilities from REC
Solar.

The "small but significant" acquisition will complement the group's
electricity generation and retail capabilities in the country, said Mr
McGregor in a statement.

The Singapore government, while firm on the stance that it will not
subsidise solar power, has also done its part to spur solar adoption.

JTC last month gave Sun Electric the rights to install solar panels on the
rooftops of 27 JTC buildings, and to export the solar energy into the grid
which can also be sold to users in other buildings. This marked a new
business model as previously, power generated under solar leasing models
primarily served users of the building itself before excess energy is
brought into the grid.

Government agencies have also aggregated their solar demand through the
SolarNova scheme led by the Economic Development Board (EDB).

In the private sector, various companies have taken the green route. Apple
made waves in late-2015 when it became the first company here to be entirely
powered by renewable energy in a landmark deal with local solar developer
Sunseap.

More recently, Keppel Land said its corporate headquarters in Bugis Junction
Towers are now fully powered by renewable energy generated offsite.

The increased carbon-consciousness across both the public and private
sectors has accelerated the adoption of solar power on the island, with
installed solar capacity nearly quadrupling over the last three years to
reach 129.8 MWp at the end of the first quarter this year.

Meanwhile, tests to explore the viability of placing solar panels on
reservoirs are underway, with 10 different photovoltaic systems currently
being tested out in the western Tengeh Reservoir. If viable, this promises
to raise the amount of solar energy that can be generated in land-scarce
Singapore.

But a rise in solar adoption also brings along increased stress on the grid
and other operational challenges, as solar power is intermittent in nature;
power generation firms will have to ensure there is sufficient baseload
power even with higher use of solar energy. Among the issues that will have
to be worked out is how the increased costs in operating the grid and
ensuring sufficient baseload power can be fairly distributed among the
various parties involved.

To be sure, renewable energy such as solar is only one of a few technologies
changing the face of the energy sector worldwide; others include energy
storage and blockchain.

To this end, the EMA's recent proposal for a regulatory sandbox to test new
energy technologies and business models is surely a good move.

As the local electricity sector becomes more sophisticated, new products
will be introduced to the market. Already, electricity retailer iSwitch has
brought in carbon credits to give consumers another route to go green. Other
retailers have also indicated interest to try new products with the
regulatory sandbox.

Having more choices is almost always beneficial for the consumer - as long
as these are sustainable. For now, it is still unclear if the local market
is large enough for the many retailers to survive.

Therefore, even as the energy buffet table fills up, the EMA will certainly
have to keep a watchful eye. It might take quite a while yet before the
shape of Singapore's future electricity market fully emerges.

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Link to Original Article:
http://www.businesstimes.com.sg/energy-commodities/singapore-electricity-sec
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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com