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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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