Growth in Singapore's clean power generation may beat expectations in the long run, thanks to government efforts to promote the sector.
Still, a lack of private sector enthusiasm to enter the market and slowing power consumption may drag the pace of renewable energy capacity build-up, Fitch Solutions Macro Research said in a report on Monday.
So far, government incentives and policies to boost clean energy generation and cut back carbon emissions as part of global efforts to fight climate change have kept the country on track to reach its 2020 solar capacity target of 350 megawatt-peak (MWp).
A long-term capacity target was set in October to reach 2 gigawatt-peak (GWp) by 2030, with an energy storage deployment target of 200MWp beyond 2025 to support the solar sector's growth.
Fitch Solutions said it forecasts renewables - primarily biomass and waste facilities and solar power and excluding hydropower - to expand from 413MW in end-2018 to over 1.4GW and account for 4.6 per cent of total generation by 2028.
"We believe that increasing government efforts towards sustainability in the power sector provides upside risk to our renewables forecast," Fitch Solutions said.
The Government has focused its support on the solar sector, given the potential for deployment of small-scale installations in a country that enjoys high solar irradiance.
That makes Singapore relatively attractive in terms of wider deployment of photovoltaic (PV) cells.
The 50MW Tengeh Reservoir floating solar plant is one of the world's largest single floating solar PV systems and Singapore's biggest renewable power project. It is being developed by national water agency PUB in conjunction with the Economic Development Board (EDB).
Solar capacity growth over the past few years came largely from various government initiatives, according to the report.
For example, the Energy Market Authority lowered the fixed component of the licence fee for larger generators, ranging from 10MW to 400MW, cutting the cost of installation of solar panels. Application processes for solar installations were also streamlined and simplified.
Under the SolarNova programme, a joint effort between the EDB and Housing Board (HDB), solar capacity tenders are issued by aggregating demand across government agencies.
The programme aims to install rooftop solar panels in half of all HDB buildings by this year.
The HDB announced this week that it has exceeded its previous target of 220MWp by this year - the equivalent of powering 55,000 four-room flats. It has set a new target of 540MWp by 2030, which can reduce carbon emissions by 324,000 tonnes a year.
In contrast, Fitch Solutions believes there are limited incentives for private investors to enter the market. "Most commercial and industrial players, such as large manufacturing facilities or large property owners, already enjoy a reliable and high-quality power supply and have few incentives to switch and invest in solar capacity," it noted.
Despite the challenges, there is some progress on that front.
Keppel Corp's property arm, Keppel Land, recently announced that it would be installing an assembly of solar PV panels spanning about 400 sq m on the roof of Keppel Bay Tower, making it the first commercial development here to use renewable energy to power all its operations.
Keppel, through its electricity retailer Keppel Electric, will buy renewable energy certificates, which are generated from PV panels installed at Keppel Offshore & Marine yards in Singapore. When completed next year, Keppel Bay Tower's PV system is expected to generate an energy yield of about 100,000 kilowatt hour (kWh) a year.
But a rapid boost in electricity consumption growth will remain a structural challenge, as Singapore's per capita power consumption is already high by global standards.
"Despite Singapore's sound economic fundamentals, the combination of weak external demand and domestic economic restructuring has heightened the risk of an economic slowdown over the coming years," according to the report.
Add to that a sharpening focus on energy efficiency as part of Singapore's overarching sustainability goals - power consumption growth will likely remain subdued.