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Parliament passes Bill to help secure electricity supply as MPs highlight urgent need to diversify energy sources

SINGAPORE — The urgent need for Singapore to diversify its energy sources was highlighted as Parliament passed a law to help the country secure its electricity supply following market volatility, which has led to higher energy prices and the exit of several retailers.

Parliament passes Bill to help secure electricity supply as MPs highlight urgent need to diversify energy sources

For now, Singapore relies on the private sector to provide sufficient generation capacity and the critical infrastructure needed for energy security and system stability.

  • A law was passed that gives the Energy Market Authority the power to secure Singapore’s electricity supply
  • This is in tandem with the country's efforts to embark on a multi-decade programme to decarbonise the energy sector
  • During the debate on the Bill, several Members of Parliament highlighted the urgency of diversifying Singapore’s energy sources
  • Dr Tan See Leng, Second Minister of Trade and Industry, spoke about what the Government is planning to do

 

SINGAPORE — The urgent need for Singapore to diversify its energy sources was highlighted as Parliament passed a law to help the country secure its electricity supply following market volatility, which has led to higher energy prices and the exit of several retailers.

This topic came under the spotlight on Tuesday (Nov 2) when Parliament debated the Energy (Resilience Measures and Miscellaneous Amendments) Bill, which was presented by Dr Tan See Leng, Second Minister of Trade and Industry.

Dr Tan, who is also the Manpower Minister, said that the amendments provide the Energy Market Authority (EMA) with “three important powers” to secure Singapore’s electricity supply as the nation embarks on a multi-decade programme to decarbonise the power sector.

The amendments updated the Act in three key areas:

  • Enhancing the protection of critical electricity and gas infrastructure

  • Empowering EMA to impose energy and carbon efficiency on parties licensed under the Electricity Act

  • Authorising EMA to acquire, build, own and/or operate power infrastructure to safeguard energy security and reliability

Elaborating on the need for the final point, Dr Tan said that at present, Singapore relies on the private sector to provide sufficient generation capacity and the critical infrastructure needed for energy security and system stability.

“However, the global energy transition introduces various risks and uncertainties in energy markets.” 

These uncertainties may inhibit private investments such as generation companies being unwilling to invest in new generation capacity to replace retiring generation units, he added.

“To safeguard energy reliability and security during the energy transition, we must give EMA the option to step in and provide the critical infrastructure and services needed to ensure the proper functioning of the energy sector.”

The amendments were passed after a 2.5 hour-long debate, which saw 12 Members of Parliament (MP) taking turns to speak.

DIVERSIFYING ENERGY SOURCES

Many of the MPs raised the issue of the recent upheaval in the Open Energy Market (OEM) and how Singapore’s reliance on natural gas had led to the current situation, where many customers are being transferred back to utilities firm SP Group, which charges consumers regulated tariffs.

Among them was opposition MP Gerald Giam of Aljunied Group Representation Constituency (GRC), who noted that importing natural gas to generate 95 per cent of Singapore’s power needs is “unusually high compared to other countries and it carries concentration risks”.

Mr Giam then asked how the Government will diversify this dependence on imported natural gas for power generation.

In reply, Dr Tan reiterated some points he had made in Parliament on Monday when he spoke about the OEM, that the authorities require power-generation companies to stockpile at least 60 days of fuel reserves, in case of disruptions to Singapore’s natural gas.

Taking into account planned and unplanned outages, Dr Tan also said that Singapore needs to maintain spare generation capacity, or a reserve margin of at least 27 per cent above peak electricity demand.

On Tuesday, he said that Singapore has been diversifying its energy sources by supplementing liquified natural gas supplies with piped natural gas.

The country is ramping up locally produced solar energy, though he said that it still has its limitations.

Citing a study from the Solar Energy Research Institute of Singapore, Dr Tan said that Singapore has a maximum solar potential of 8 gigawatt-peak, which is estimated to be reached in 2050.

This would provide only about 10 per cent of Singapore’s future energy needs and there is no time to wait until that year comes.

“We will need to continue to explore new energy solutions to meet our long-term energy needs and low emission targets,” he added.

For instance, the Government is “investing heavily” in research and development to understand the potential of deploying low carbon alternatives to generate electricity such as hydrogen.

He also said that the authorities are exploring the potential of using geothermal power, a local source of renewable energy.

Until then, there is still a need to import renewable energy from the region.

However, Ms Cheryl Chan of East Coast GRC noted that in late October, Malaysia’s Energy and Natural Resources Ministry said that it will allow only non-renewable energy exports to Singapore, while power sales to the island through self-developed transmission and interconnection facilities will not be allowed.

Given that Singapore’s ability to import renewable sources is limited by export measures set by other countries’ domestic considerations, she asked what plans were in place to overcome this challenge.

In response, Dr Tan highlighted that Singapore lies in a region that has “abundant renewable energy potential”.

For example, Indonesia has the potential for geothermal and solar power, while wind and hydro power can be found in Laos, Thailand and Vietnam. Even Australia, he said, is a possible source.

As such, Singapore welcomes companies that are “keen to collaborate” on the development of renewable energy sources to participate in EMA’s request for proposal for electricity imports, he said.

In any case, Singapore plans to “work with the private sector to build the necessary infrastructure to diversify and secure our energy supply”, Dr Tan disclosed, though what the country needs “may not be what private investors are able or willing to provide”.

Hence, Singapore must be prepared to provide the infrastructure to ensure energy security and reliability for itself, which is where the legislation to empower the EMA comes in, he added.

Other questions from the MPs included those related to cybersecurity threats in the energy sector, which was raised by Mr Louis Ng of Nee Soon GRC.

He cited several examples of how cyber attacks had disrupted the energy supply for many countries, including two incidents in 2015 and 2016 that saw cyber attacks shutting down electricity supply to hundreds of thousands of people in Ukraine for hours.

Dr Tan said that there have been no successful attacks in Singapore so far, though the EMA has detected a few spoofing and phishing attempts targeting companies in the energy sector in the past few years.

These attacks were on informational technology systems and non-critical information infrastructure networks, and they were quickly contained.

“Nonetheless, we are not resting on our laurels because we take cybersecurity threats very seriously,” Dr Tan said.

To that end, EMA will continue to work closely with the Cyber Security Agency to improve the robustness and relevance of the sector’s cybersecurity governance framework.

MITIGATING CONFLICTS OF INTEREST

Several MPs asked how EMA intends to level the playing field between private investments and those that are built, owned and operated by the authority.

Dr Tan said that EMA will ensure that these infrastructures are subject to the “same stringent standards and requirements as the private counterparts”.

It will also put in place governance structures and, if necessary, separate subsidiaries to “mitigate conflicts of interest and ensure accountability”.

“Nevertheless, I would like to reiterate, that our preference has been, and continues to be, for the private sector to provide to operate the critical infrastructure,” Dr Tan stressed.

“We remain committed to facilitating private sector investments in the energy sector.”

Related topics

Parliament OEM EMA Tan See Leng energy electricity

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