Singapore in "Fundamental Shift" to Ensure Energy Security

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Singapore in "Fundamental Shift" to Ensure Energy Security

upstream2023-10-24

The Ministry of Trade & Industry (MTI) and Energy Market Authority (EMA) are planning sweeping changes to Singapore’s gas procurement framework.Gan Kim Yong, the Minister for Trade & Industry, told ...

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enhancing regulatory requirements on electricity retailers to strengthen consumer protection; and a temporary price cap mechanism to guard against extreme price volatility in the wholesale electricity market.These measures have all been implemented in 2023.The MTI and EMA also reviewed the gas procurement framework to ensure that Singapore has sufficient gas from diverse sources for its power generation needs, and to create a more stable, secure power system.Having secure and reliable supplies of natural gas is vital for Singapore, as 95% of its electricity is generated using natural gas.Today, power gencos individually decide on the volume and tenure of gas to procure based on their own commercial considerations.However, the EMA admitted on Monday that recent years have shown that the current procurement framework does not provide assurance that there will always be sufficient gas to meet Singapore’s needs, especially during a crisis when market conditions are volatile.When each genco seeks to optimise for itself, it can inadvertently lead to suboptimal system-level outcomes. The EMA noted that, during the 2021-2022 global energy crisis, the gencos reduced the volume of their gas contracts when gas prices were high, which led to large swings in wholesale electricity prices.“Gencos have also been reluctant to enter into long-term gas contracts, which typically offer a greater certainty of delivery and price stability. This is because gencos do not want to be exposed to gas market volatility and uncertainties in the long term,” the EMA said.“In addition, global developments and the energy transition are likely to lead to more volatile oil and gas markets, which may further reduce the risk appetites of generation companies.“Given the global gas market conditions and Singapore’s relatively small demand, MTI and EMA have therefore assessed that a more deliberate and coordinated approach to gas procurement is needed.”Energy security key to energy transitionPower generation accounts for 40% of Singapore’s carbon emissions, and it will be a “complex endeavour” for the nation to achieve net zero, given its limited scope for renewable energies, according to Gan.“As we embark on a journey towards net zero, we must first ensure that we have a stable and secure power system to provide for energy shortages and volatile electricity prices, as these can quickly undermine any decarbonisation efforts,” he said.Gan highlighted the global energy crisis, when some countries had to resort to refiring coal plants to bring down electricity prices, while others — priced out of global LNG markets by high prices — burned other fossil fuels just to keep the lights on.“That is why having secure and stable energy markets is integral to the energy transition efforts.”Nuclear on the radarOne technology that Singapore has been closely monitoring of late is nuclear energy.“We conducted a pre-feasibility study on nuclear energy more than 10 years ago, which concluded that nuclear energy technologies available [then] were not appropriate or suitable for deployment in Singapore,” Gan said.“But we need to build capabilities to understand… [if] nuclear energy technologies are becoming safer and have the potential to be cost competitive.“This way, you can study the options seriously when these new technologies have become viable.”","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}