Importance of 'greening' Singapore's power mix

NATURAL gas, the cleanest of all fossil fuels, is what Singapore imports to power its homes, businesses and industries. Carbon dioxide emissions from natural gas combustion are 50 to 60 per cent lower when combusted in efficient natural gas power plants, compared to typical coal-fired power plants.

But as the earth and its inhabitants face the intensifying effects of climate change, the energy transition to even cleaner sources is becoming more urgent.

Greening the power mix will lead to the greening of activities that rely on electricity - important since the Energy Market Authority (EMA) predicts that power use in Singapore will increase at a compound annual growth rate of between 2.5 and 3.1 per cent (see sidebar below).

Paving the way for solar-powered Singapore

Recognising the need for greener sources of power generation, the Singapore government has set clear targets: to peak carbon by 2030 and halve that by 2050. Plans have been laid out for four "supply switches": natural gas, solar, regional power grids and low-carbon alternatives.

Given the abundance of sunshine in Singapore and the dramatic fall in the cost of solar energy over the past decade, solar is often regarded as our most promising renewable energy solution.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

However, it is not without its challenges, namely intermittency due to cloud cover and rain, and land scarcity, which the nation has to overcome to scale up solar generation.

We will get there, although probably not in the short term. In fact, expectations are that solar will supply just around 3 per cent of projected energy demand by 2030. Still, infrastructure and capabilities need to be built now, with an eye on the role that solar can play in the future.

For one, innovation in energy storage solutions is needed to tackle the problem of intermittency.

Such solutions are needed to enhance the resilience of our energy grid and to that end, Singapore targets to achieve energy storage deployment of at least 200 megawatt (MW) beyond 2025. Batteries are, however, still too expensive. Improvements to this technology and lowering of cost are needed to use solar and other renewables in a more meaningful way.

More innovative projects are also what is needed to get around Singapore's space constraints.

Singapore has been testing the waters, with projects like the floating solar farm in Tengeh Reservoir - which opened earlier this year. But solar panels on other surfaces ought to be explored too. Solar highways and solar canals have been built in other countries - with varying degrees of success, it must be said.

Nevertheless, these are useful case studies for Singapore to consider.

Hydrogen is being studied as a fuel for electricity generation and in emissions-heavy sectors like transport. Although it has yet to become commercially viable, it has the potential to be part of Singapore's power mix and could help the country diversify outside of natural gas and solar in the future.

Meanwhile, work is being done to develop carbon capture utilisation and storage technologies that collect planet-warming carbon dioxide at the emitter's source, say at a power generation facility or at an industrial site.

While all available technologies should be considered, low-carbon alternatives have a long way to go. A fine balance needs to be struck such that research and investment into these solutions do not detract from financing support and the work currently being done to implement more viable green technologies.

Regional grids based on renewables

One of the most promising "switches", as scoped out by the EMA, is that of regional power grids. The fruition of such projects requires substantial investment in the transmission grid in the region. Most importantly, the political will must be present, and on that point, there have been encouraging signs.

Early trials towards a regional power grid include a partnership with Malaysia to import 100 MW of electricity for two years. This will make up about 1.5 per cent of Singapore's peak electricity demand. The LaosThailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) will also allow Asean member states to tap into potential benefits like reduced costs and an increased ability to integrate variable renewable energy resources.

For land and resource scarce Singapore, such a grid would be immensely useful. Financiers need to mobilise capital to support such green projects to speed things along - and the good news is that an increasing number have concrete strategies in place to do so. OCBC, for one, has set a "25-by-25" target.

That is, we aim to build a sustainable finance portfolio of S$25 billion by 2025. This target was set after we surpassed our original S$10 billion target in the first quarter of last year - two years ahead of schedule. Having hit S$20 billion in such commitments by the end of 2020, we are looking to revise our target, and financing regional projects will definitely come into play.

Ultimately, the availability of cost-competitive green energy is not just good for one country - it would help the entire region remain competitive and attractive for multinational companies which have a large demand when it comes to power for their operations. To achieve their sustainability goals, these corporations are likely to be willing to pay a premium for clean energy, say experts.

Besides reaping economic rewards, South-east Asian countries becoming more energy-efficient means positive environmental outcomes for others. For instance, a country cleaning up its energy mix means that its neighbours have access to clean air - and better human health.

It is such collaboration that the world needs in order to collectively achieve the goals of the Paris Agreement. If limiting global warming to 1.5 degrees celsius is to be possible, then all must do their part, as the fight for the liveability of our planet requires an all-hands-on-deck approach.

• The writer is head of structured finance and sustainable finance, OCBC Bank.

Energy use in Singapore on the rise

ENERGY use in Singapore is on the rise, driven in part by emerging sectors such as electric vehicles, data centres and agri-technology.

But electricity use at home plays a part too. The OCBC Climate Index, a measurement of the current levels of environmental sustainability awareness and climate action among Singaporeans, found that:

• 24 per cent of Singaporeans know that air-cons use the most electricity out of all household appliances, yet use air-cons for more than seven hours a day.
• Only 54 per cent of Singaporeans have switched to a green electricity plan. Making this switch would save as much as 800kg of CO2 per person in a year, according to SP Group.