ST Explains: What does S’pore’s more ambitious clean import targets mean for energy transition? 

SINGAPORE – Singapore recently announced it would increase its electricity import goal from 4GW to 6GW by 2035 after giving the green light to import 1.4GW of additional solar power from Indonesia.  

With the new deals, 5.6GW of electricity will be imported

– from Indonesia, Cambodia and Vietnam – accounting for around 30 per cent of Singapore’s energy needs by 2035. Of these, 3.4GW will come from Indonesia.

In a LinkedIn post on Sept 11, Second Minister for Trade and Industry Tan See Leng said that the Government is also keen for the Malaysian state of Sarawak to be a source of renewable energy for Singapore.  

What are the implications of these developments?

Q: Will a larger share of Singapore’s electricity needs be met with clean energy imports, given the new targets? 

The Energy Market Authority (EMA) says the new target of 6GW will still meet about 30 per cent of Singapore’s electricity needs.

This is because the Republic’s electricity demand is projected to increase by around 3 per cent to 5 per cent a year over the next decade, and the revised target was made in view of growing energy demand and good progress on credible electricity import projects, said the agency.

Asked whether the share of natural gas in Singapore’s energy mix will likely drop, ISEAS – Yusof Ishak Institute director and chief executive Choi Shing Kwok said that the higher power import targets, if they materialise, will help Singapore reduce its share of natural gas, earlier. 

EMA has said that it will expect natural gas to make up more than 50 per cent of its electricity mix by 2035, down from over 90 per cent currently.

However, this will also depend on the relative prices of other clean power alternatives, and the progress of other technological solutions such as green hydrogen, carbon capture and storage solutions, and whether Singapore deploys the use of nuclear energy. 

Q: At least half of Singapore’s clean energy imports will now come from Indonesia. Is Singapore putting all its eggs in one basket?

In parallel with its imports from Indonesia, Singapore is also working on several deals with countries such as Laos, Cambodia, Malaysia, Vietnam, and even Australia, said Mr Choi.

Australia said in August that it had been given the go-ahead for a A$20 billion (S$17.6 billion) solar project to ship electricity to Singapore via a 4,300km undersea cable. EMA is currently in discussions with SunCable, the company behind the project, on its proposal. 

Mr Choi said: “This will ensure the diversification of sources and help with risk management.”

At the same time, Singapore has a stable, robust and mutually beneficial economic relationship with Indonesia, and the Republic has also been one of the largest foreign investors in Indonesia over the years, he added.

“This should provide a strong ballast to help buffer the relationship against any geopolitical difficulties that may arise.”

An EMA spokesman told ST that it will continue to diversify its electricity import sources.

Q: How will the electricity import project deal with Singapore benefit Indonesia?

According to the agreements that have been signed by the companies, at least five projects will be based in Indonesia’s Riau Islands province, exporting at least 2.4GW of electricity. One project, targeted at exporting some 600MW of clean electricity, will be located in Bulan, in Batam.

These projects are part of a larger collaboration between the two countries to develop a renewable energy industry in Batam that will also produce equipment and build power plants to supply electricity for Indonesia’s domestic renewable needs. 

The Green Corridor project is estimated to attract some US$50 billion (S$65 billion) of foreign direct investment, and create tens of thousands of jobs, said the Sustainable Energy Association of Singapore in a 2023 statement.

Mr Putra Adhiguna, the managing director of Energy Shift Institute, an energy finance think-tank, said that the export projects are crucial to kick-start Indonesia’s domestic solar photovoltaic supply chain, but that these expansions cannot go unchecked, as they may deplete potential solar resources needed by the country. 

Currently, renewables make up around 14 per cent of Indonesia’s electricity mix, with a target of reaching 23 per cent by 2025.

However, there have been rumours that the renewable energy target would be revised lower, to between 17 per cent and 19 per cent instead, amid challenges that the country faces in its renewable push.  

For example, the country still has excess coal capacity, and a price cap on coal, which makes it difficult for renewable energy to compete, even with falling costs. 

Mr Adhiguna said: “Indonesia’s largest solar project has a capacity of about 200MW currently, while some of the export projects aim for 2,000MW-scale development. Questions will inevitably arise from the public, on who this energy transition would really benefit. Boundaries will need to be drawn.”

Q: What would the recent developments spell for regional clean power trade?

While Singapore has been making considerable headway with its bilateral trade of clean energy in the region, it has hit a roadblock with the import of hydropower from Laos, via Thailand and Malaysia. 

Under a trial, Singapore started importing up to 100MW of hydropower from Laos in 2022, but Reuters reported in mid-July that an extension of the deal had been stuck amid disagreements over how the energy will be transmitted through Thailand and Malaysia.

Singapore has yet to sign deals with Thailand and Malaysia due to disagreements over the quantity of power to be purchased, said Reuters.

EMA told ST that it has already approved the next phase of the project, but it will need approvals from the other countries involved to proceed.

The agency is also prepared to consider additional clean energy imports, especially if they allow Singapore to work together with its neighbours to develop the Asean power grid, said its spokesman.

Asked if the nature of clean energy trade moving forward would likely be more bilateral rather than multilateral, Dr Victor Nian, founding co-chairman of think-tank Centre for Strategic Energy and Resources, said he expects this to be the case in the near term. 

“Multilateral arrangements require negotiations to agree on the benefits and trade-offs. Asean countries will need to review the developments of their respective electricity markets, before commencing on significant discussions on multilateral regional cooperation,” he added. 

Talks on an Asean power grid – which would connect the electricity grids in the region – to facilitate regional power trade began 20 years ago, but progress has been slow.

“Although having Asean power grid infrastructure will still help to facilitate regional electricity trade, the goal of materialising open and competitive electricity exchange may still be a long journey away,” said Dr Nian. 

Other countries in the region – Thailand, Vietnam and Cambodia – have been actively importing hydropower from Laos, which has goals of harnessing its massive hydropower to become the battery of South-east Asia.

To reduce its overreliance on the strained water resource, the country is now taking a leap into wind energy, with plans to export some of this clean power to Vietnam.