Energy Handbook 2011 - GBR

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1
C o u n t r y P r o f i l e : S i n g a p o r e
developed R&D sector to fuel innovation
in green products and technologies.
However, the most important cause of
Singapore’s rise as an energy centre has
been the immense demand for power,
as countries in south-east Asia struggle
to find enough electricity to fuel their
burgeoning economic growth.
History and Recent
Developments
Singapore’s power industry has seen
two major trends that have accentuated
its attractiveness for investment in the
south-east Asian region. Singapore was
one of the first Asian countries to embark
on a market liberalisation path in the
late 1990s, and having once benefited
from the experience of other countries,
it is currently serving as an example
for its neighbours who are considering
liberalisation.
Dave Carlson currently runs the Energy
Market Company (EMC), which is charged
with operating Singapore’s wholesale
electricity market. As he explains: “I am
a New Zealander, and in the southern
hemisphere New Zealand was one of
the pioneers in reforming and liberalising
its electricity industry. When Singapore
decided that it was going to go down
a market-based path for its electricity
industry, it looked around to see who had
done this before – and started engaging
New Zealand.”
“New Zealand has a similar market
design and similar-sized system,”
Carlson continues, “so there were lots
of commonalities there. Starting up new
markets is not the easiest thing to do and
so Singapore had to see how they could
reduce risk. There was an agreement to
set up EMC as a joint venture between
Singapore and at that time a New Zealand
market operator.”
The Energy Market Authority (EMA), the
chief regulator of Singapore’s electricity
and gas market, plans to incorporate
smart grid technologies to open up the
market further. “We still hope to open
up the market for the small consumers.
We think this will be possible because of
the new technologies that are now being
developed, especially in the area of smart
meters and smart grids,” says Lawrence
Wong, EMA Chief Executive. “Right
now, we are doing a pilot to see what
the technologies can do and whether at
the end of the day it will be worthwhile
for the consumers to pay for these
technologies.”
Generation Mix
Singapore’s premier challenge has been in
finding secure fuel resources to power its
electricity-dependent industries. Having
no fuel resources itself and little space
for renewables, Singapore has depended
heavily on gas imports from its neighbours
Indonesia and Malaysia. So far about
80% of electricity is generated from gas,
with the rest mostly from fuel oil, and a
tiny amount from renewables and other
sources such as waste-to-energy plants.
In an effort to increase energy security,
the EMA recently embarked on the
construction of the country’s first LNG
terminal. This will be Asia’s first such
facility that is able not just to import but
also to re-export LNG.
The terminal, which will begin
commercial operation in 2013,
will increase the fraction of gas in
Singapore’s generation mix.
“I think in the near to medium term, we will
still be very much a gas-fired economy,”
says Lawrence Wong. “We currently have
80% of our electricity generated using gas
and with LNG coming into Singapore we
will have even more gas as a proportion
of our energy mix.”
of Singapore’s power generators have
already signed long-term contracts for the
use of LNG. Neil McGregor, who used to
run Singapore electricity generator Power
Seraya, was recently appointed CEO of
Singapore LNG Corporation, a subsidiary
of the EMA, and is currently responsible
for the construction and future operation
of the terminal.
As he explains: “When you look at the
oil and gas industry, Singapore is in the
first five of the major traders in the world.
The fact that we are now building a gas
capability pretty much dovetails with the
infrastructure that’s already here. We are
halfway between supply and demand,
with suppliers based in the Middle East
and Australia, while significant volumes of
the demand is in north Asia. North Asia is
feeling constrained by the size of the ships
that they can take – there are a number
of ports in Korea, Japan and Taiwan that
cannot take larger vessels and are thus
missing out on an economic opportunity,
but they can take smaller vessels at a
higher frequency. The economic equation
will be: do those countries wish to
continue building expensive storage
terminals when Singapore can do it more
cheaply? The construction costs and the
infrastructure that exists here is more
diversified than what you will find in
north Asia, which is why we are looking
at Singapore becoming a world premier
gas trading destination.”
Privatisation and Major
Players
Another major trend that has demonstrated
confidence in Singapore’s power sector
has been the privatisation of the citystate’s
major power stations in the past
several years.
Currently, electricity generation is spread
among three large players – Senoko
Energy, Tuas Power and Power Seraya
– and two smaller ones: Keppel Energy
and Sembcorp. Tuas Power was recently
acquired by China Huaneng Corporation; it
has 2.7 GW of capacity from four natural
gas combined-cycle plants and two oilfired
plants. “The fact that you have
major players buying the generators here
is seen as a good business case to invest
in Singapore,” says Lim Kong Puay, CEO
of Tuas Power.
All five power entities have retail
electricity subsidiaries and compete with
one another in terms of the tariffs they
offer to eligible consumers. John Ng,
CEO of Power Seraya, believes that the
deregulated market structure has opened
up competition in more ways than one:
“We have experienced what a regulated
market is like and we have experienced
what a deregulated market is like. I am
a firm believer in the deregulated market
because it brings about much greater
efficiency – we have seen that happen in
Singapore.”
Since competition was introduced into
the market, Singapore has been able to However, the construction of the LNG
open up 75% of all electricity consumers. terminal holds the potential to transform
Currently the largest industrial users in Singapore from simply being a leader
Singapore have a choice in their electricity in the oil-trading sector to become one
retailer, while the other 25%, representing of Asia Pacific’s largest gas trading
residential users, buy their electricity at a hubs. The terminal will eventually be
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regulated tariff.
able to handle 6m t/y of LNG. All five
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