EMA to be given option to step in and provide infrastructure, services for energy sector

THE Energy Market Authority (EMA) must be given the option to step in and provide the critical infrastructure and services needed to ensure proper functioning of the energy sector, which is critical to Singapore's survival, said Manpower Minister Tan See Leng in Parliament on Tuesday (Nov 2).

At the second reading of the Energy (Resilience Measures and Miscellaneous Amendments) Bill, Tan proposed updates to the relevant aspects of Singapore's EMA Act, Electricity Act and Gas Act to ensure that EMA has the "necessary levers to navigate the energy transition", while ensuring that Singapore's energy supply remains secure and reliable.

One of these amendments is to Section 3 of the Electricity Act and the Second Schedule of the EMA Act, which will empower and enable EMA to acquire, build, own or operate critical infrastructure.

Some examples of such infrastructure are generating units, energy storage solutions and transmission infrastructure, including those that may be required for cross-border electricity trading.

This, said Tan, will allow EMA to provide the required critical infrastructure when there is a need to do so. Where necessary, EMA may directly operate the critical infrastructure or set up a subsidiary to do so.

This amendment also expands EMA's borrowing powers in the EMA Act to allow EMA to issue bonds, in addition to borrowing through commercial or government loans, to finance the construction of these infrastructure.

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Tan noted that Singapore currently relies on the private sector to provide sufficient generation capacity and the critical infrastructure needed for energy security and system stability.

While this ensures market discipline and cost effectiveness, the global energy transition introduces various risks and uncertainties in energy markets. These uncertainties may inhibit private investments.

For instance, generation companies may not be willing to invest in new generation capacity to replace retiring generation units, or in new technologies which incorporate cleaner fuel.

However, Tan acknowledged that these powers that will be given to EMA are "broad and can affect the commercial considerations of the stakeholders in the power sector".

He also noted that power generation companies were concerned the units that would be owned and operated by EMA would compete with their units in the wholesale electricity market and depress wholesale electricity prices. These companies also expressed concern that EMA would act as both regulator and owner/operator of the generation unit.

Tan said the amendment is "worded broadly" to provide EMA with the flexibility to react to the wide range of scenarios which may undermine the security, stability and reliability of Singapore's energy sector.

"Our preference is for the private sector to build, own and operate the electricity infrastructure," he said, adding that EMA would have explored alternative solutions to provide the critical infrastructure needed before exercising this power.

Tan also said EMA will be putting in place safeguards to ensure that they do not compete unfairly against the private generation companies.

For example, EMA may set up a separate subsidiary to own and operate a generating unit, and will put in place proper procedures and governance structures to mitigate any conflict of interests.

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