Schools and government agencies will work with private firms and electricity grid operator SP PowerAssets to find ways to shift their electricity use to off-peak hours, to ease the strain on the grid and make the system more efficient.
Yesterday, the Energy Market Authority (EMA) signed a memorandum of understanding with 16 organisations to test the viability of demand management models and other technologies, via Project OptiWatt, a pilot that will run for two years.
Such business models take, as a starting point, the fact that when electricity demand goes up, so does the price of electricity.
Hence a business model that is being tried out by independent electricity retailer Red Dot Power is an incentive scheme that pays consumers to voluntarily reduce electricity use during peak periods identified by the company.
A one-day preliminary trial at Nanyang Polytechnic (NYP) found that turning off one of its air-con chillers for half an hour during the peak usage period of 11am to 2.30pm saved the school 550 kilowatt hour of electricity, 7 per cent of its total consumption, said Mr Henry Heng, deputy principal (organisation excellence) at NYP.
This led to no discernible difference in comfort.
Mr Vijay Sirse, chief executive of Red Dot Power, said demand management benefits consumers by reducing their electricity bills, and also electricity retailers by cooling electricity demand and hence lowering prices.
"Retailers are obligated to supply at the agreed price even when the prices are high. So it will also help us if the market prices go down as I can buy the power at a lower price," he said.
Demand management can lead to a big payoff. A study by Professor Frank Wolak, director of the energy and sustainable development programme at Stanford University, found that every megawatt reduction of peak demand in Singapore could mean cost savings of about $1.6 million.
Under the agreement, technologies that can change consumption patterns will also be tested.
These include Power Zee, a mobile app developed by Nanyang Technological University (NTU) and Engie Lab Singapore.
The app, which has been tested out on 1,850 NTU students, aims to reduce energy use through user engagement and game-design elements. Users can give feedback on indoor temperatures, allowing the air-conditioning system to be adjusted in real-time using the feedback data.
