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
Despite the limited space to expand,
and with the EMA’s efforts to boost
competition, Singapore’s generators
have shown resilience by planning ahead
and diversifying their activities. Senoko
Energy, for example, is Singapore’s
largest generating company, with a
license for 3.3 GW, and is currently
looking within Singapore for opportunities
in new sectors. “We hope that the cap
Interview with Lawrence Wong,
Chief Executive, Energy Market Authority
Q – With only a handful
of large players in
Singapore’s power
industry, entry into
the market here is
challenging. Please
introduce us to the
current market structure
and EMA’s efforts to
make it more competitive.
A – We currently have
five power companies
in Singapore, three big and two small. The sixth
company to come in is Island Power, which is
building an 800 MW plant. The three big ones
make up about 80% of our generation capacity, so
it is not an entirely competitive market – there is a
large concentration of market power. One initiative
that the EMA has taken to boost competition is to
cap the licensed generation capacity of the three
big players. Beyond that, our strategy is to keep
the market open, to minimise the barriers to entry,
and if demand grows, to encourage the smaller
players to extend their capacity or to welcome
new entrants into the market. We facilitate this
by providing as much information as we can.
That is why we publish every year a Statement of
Opportunities for the energy market, demonstrating
how much demand and how much supply there
will be. One of the key constraints in Singapore
is land, but we have certain parcels of land
specifically earmarked for power generation and
we provide that information to those investors who
think there is an investment opportunity here.
Q – Due to its excellent business environment
ratings, Singapore has become a hub for many
renewable energy companies as a centre for R&D.
What steps is EMA taking to keep Singapore as
an attractive destination for renewable energy
companies to come and set up base here?
on authorised capacity will not be here
forever, although we do understand
that, from the regulatory point of view,
there is an interest in gradually reducing
concentration,” says Brendan Wauters,
CEO of Senoko Energy. “Even if you only
focus on Singapore, it does not mean
that you should only focus on power
in Singapore. That is why I have high
hopes for Senoko Energy to become
A – There are two different aspects to this
question. One is whether Singapore is attractive
for renewable companies for the deployment of
renewable energies. In this respect we have to
accept the practical reality that we are not a very
big market for renewable energy and we do not
have the potential for renewable energies. Solar is
one that has some promise, but solar is still more
expensive than electricity from the grid.
We do not have a feed-in tariff, and we do not
think that the feed-in tariff is a good policy, since
it is a subsidy for renewable energy and it distorts
the market. However, we encourage any company
to put up their solar PVs here and they are free to
do so.
Separately, Singapore still offers something
meaningful to the renewable energy industry, not
as a market for investors but rather as a hub for
companies who wish to be based here, to establish
their manufacturing operations here and work in
clean-tech and renewable energies. We are quite
attractive as a regional hub serving south-east
Asia and the broader Asian region because we
have good infrastructure, skilled manpower, and
a strong intellectual property regime. These are
our competitive strengths and advantages and this
gives us the capability to attract companies to
Singapore. This strategy has worked quite well and
we have grown the clean-tech sector by having
more companies coming here to work in the area
of biofuels, solar and wind.
We welcome and encourage international
companies to make use of Singapore as what we
call a “living laboratory”. We are a small market
– you might not be able to deploy everything in
Singapore – but if you have an interesting and
innovative product, then come here, test-bed your
product and use Singapore as a launching pad to
market your product or application to the region.
involved in gas retailing. I still see quite
a bit of potential in Singapore and this
is why Senoko will keep focused on the
Singaporean market.”
Sembcorp, on the other hand, has plans
to grow further outward into the region.
As one of the smaller generators in
Singapore, Sembcorp recently received
a licence for an additional 900 MW on
top of the 785 MW that it already has. A
pioneer in clean energy power generation,
Sembcorp was the first company to
introduce cogeneration to the local market,
but Ng Meng Poh, Sembcorp’s Executive
Vice President, Singapore and ASEAN,
sees his company expanding abroad.
“Sembcorp’s playing field is not restricted
to Singapore. We are already in the UK,
China, UAE and Vietnam power market,
and have power plants in India and Oman
in development,” he says. “We continue
to look for further opportunities to grow
the business and are open to looking at
other opportunities in the region.”
New Entrants
The liberalisation of the power sector has
opened up opportunities for newer players
to come into the market. Island Power,
which was acquired in 2009 by India’s
GMR Infrastructure, is now planning to
start construction of an 800 MW gas-fired
power plant on Jurong Island, home to
the majority of Singapore’s manufacturing
and processing industries. With a planned
cost of S$1.25bn, the Island Power
project will bring substantial foreign
direct investment (FDI) into Singapore’s
infrastructure.
After Island Power received its generation
licence back in 2002, the project ran
into severe challenges when it could not
arrange to import the necessary gas from
Indonesia. InterGen, which was running
the project at the time, decided to sell
it to GMR and since then things have
proceeded quickly. “Singapore is a very
secure environment and our shareholders
felt very comfortable because of the legal
and social systems in place here,” says
Ng Quek Peng, who currently serves as
GMR’s head for the region. “There is
definitely a demand here for electricity
and it is growing. This is GMR’s first
greenfield power plant outside of India.
Singapore is a very good place to start,
and from here we will be looking at other
power plant projects in south-east Asia.”
Island Power’s success owes a lot to
government support. When it comes to
the domestic power sector, the EMA and
other agencies play the leading role in
inviting companies to Singapore, and in
making the move as smooth as possible.
“The Singapore government agencies have
been very efficient, and more importantly
they have been very transparent. The
more we deal with Singapore agencies
the more comfortable we feel about our
investment here,” says Ng Quek Peng.
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