EMA to set up standby fuel facilities to boost energy security

Singapore is taking steps to ensure that its electricity supply remains secure and reliable amid a global fuel crunch that has seen widespread power outages elsewhere.

Among other measures, the Energy Market Authority (EMA) will establish standby fuel facilities that power generation companies (gencos) can draw upon to generate electricity.

EMA, which regulates the Republic's energy supply, acknowledged yesterday that the challenging conditions may force some electricity retailers to exit the market, but assured consumers that it will ensure a smooth transition and their electricity supply will not be disrupted.

Fuel supplies have been squeezed globally amid recovering economic activity and severe weather events, EMA said. It added that it will work with gencos to track their fuel supply levels and generating capacity.

"EMA will provide the standby fuel to them if gas supplies are affected or there is a need to ensure reliable electricity supply to consumers in Singapore," said the authority, which described its temporary measures as "extraordinary".

It said it had informed the gencos to contract sufficient fuel to meet the demands of customers of their retail arms.

"To help gencos which have not contracted enough gas, EMA has informed gencos which are looking to sell their excess natural gas supply to provide other gencos and EMA with the first right of refusal, before they can divert or onsell the excess gas to other parties," it said.

There are seven main gencos in Singapore.

More than 95 per cent of Singapore's energy mix comes from natural gas, all of which is imported through pipes from neighbouring countries, or liquefied natural gas (LNG) from all over the world.

Earlier this year, EMA appointed two new LNG importers, on top of the existing two, to provide more options to gas users here.

But the global gas crunch has prompted EMA to take the pre-emptive measures.

The authority said it will also direct gencos to generate electricity using fuel from the standby facilities if needed. "EMA is monitoring the Singapore wholesale electricity market closely and will intervene if necessary," it added.

EMA said it will review these measures to see if they are still needed by March 31 next year.

The measures come after three independent retailers exited the open electricity market within days of one another, citing volatile market conditions and unsustainable price plans. Ohm Energy and iSwitch announced their departures last week; Best Electricity did so via a Facebook post yesterday.

On Monday, Union Power said it will scale down its operations by closing some retail accounts.

EMA said yesterday that retailers will not be allowed to charge an early termination fee, and households will have their security deposits returned to them after outstanding charges are offset.

Mr Tan Tsiat Siong, a lecturer at the Singapore University of Social Sciences' School of Business, said the steps taken by EMA would reassure people that the Government was stepping in and prioritising the energy security Singapore has always enjoyed.

Establishing standby fuel facilities and stocking up natural gas during these times will be costly, but feasible and necessary, he said. "The economic cost of power outages cannot be underestimated and is almost certainly larger than the price we pay for procuring and storing LNG even when gas is scarce."