SINGAPORE - In times of a global energy crisis, the Energy Market Authority (EMA) may be given the power to get electricity retailers and consumers to ration power “for extended periods of time” as a last resort under extreme circumstances, it said on May 8.
This is one of the proposed changes to the Electricity and Gas Act – the regulatory framework that supports decarbonisation in the energy sector, ensures energy security and keeps Singapore’s power sector cost-competitive.
The Ministry of Trade and Industry (MTI) and EMA said jointly that Singapore’s energy landscape will “change significantly”, including in planning for infrastructure development and how energy markets are regulated.
MTI and EMA are seeking feedback on the proposed changes from the public from May 8 to June 5.
This comes as the 2021 to 2022 global energy crisis highlighted the risks that global gas supply disruptions could cause to Singapore’s electricity supply, said EMA.
About 95 per cent of Singapore’s electricity mix comes from gas.
In 2021, soaring electricity prices caused six retailers to fold and exit the market.
“While Singapore avoided supply disruptions then, we must prepare for future emergencies, no matter how unlikely they might be,” EMA added.
The authority noted that similar regimes are in place in other countries, such as France and Germany.
The Straits Times has asked EMA how its power-rationing exercise would work.
In Germany’s three-stage emergency plan to a potential gas supply disruption in 2022, the last resort would entail restricting supply to industry, while households and critical institutions such as hospitals continue to get access to gas supplies.
France’s contingency plan to the 2022 energy crisis entailed a power-rationing exercise, which would affect companies most. It proposed a “quota trading system” that would enable companies to buy and sell power quotas.
Another proposed change may allow EMA to recover the costs for initiatives to strengthen energy security, develop a competitive market and support the decarbonisation of the power sector that it implements from industry players and consumers.
EMA noted that recouping these costs would first have to be approved by the minister, and it would exercise its powers “only when necessary and with due care” to ensure that overall electricity costs are kept in check.
ST has asked EMA for the circumstances in which it would recoup costs from industry players or consumers.
Other proposed amendments to the Act include a requirement for power generation companies (gencos) to procure gas solely from the central gas entity – which will be formed by EMA to aggregate gas demand from gencos and centralise gas procurement for the power sector.
EMA had earlier said that it will be establishing the central gas entity in 2024, as many gencos individually decide on the volume and tenure of gas to procure based on commercial considerations, but this does not provide the assurance that Singapore will always have enough gas to meet its needs.
The changes will also allow the introduction of gas procurement terms for gencos, such as mandating minimum gas contracting obligations to ensure they contract sufficient fuel.
In addition, the Act will help to facilitate shared access to critical infrastructure in Singapore. For instance, with Singapore looking to import renewable energy from countries in the region, electricity importers may need to access electricity distribution infrastructure owned by other companies.
The amendments to the law can therefore help the direct owners of such infrastructure enter into an agreement with other companies to gain access to the infrastructure, with reasonable compensation provided to the owner.
Those who wish to share their feedback can e-mail EnergyLegislation@mti.gov.sg or send mail directly to MTI with the subject line Energy Legislation Consultation, by June 5.
