Short circuit in electricity open market: Impact on consumers, retailers and the model itself

THE shakeout in Singapore's electricity market has come fast and furious. Some sector consolidation was expected from the get-go, with 13 electricity retailers jostling for 1.4 million households to begin. But few of these retailers foresaw the current exceptional circumstances. Perhaps they should have.

One early warning sign was the closure of Red Dot Power. The independent retailer (IR) was the first casualty of the fierce competition in the early days of the city state's sector liberalisation under the Open Electricity Market (OEM). It bowed out in January 2019 and later cited "significant volatility" in the wholesale electricity market, where retailers buy power, as well as limited risk management and hedging avenues.

Those same complaints are now echoing across the electricity market.