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Singapore takes 'extraordinary' steps to safeguard energy supplies, with standby fuel facilities to be set up

Singapore takes 'extraordinary' steps to safeguard energy supplies, with standby fuel facilities to be set up

A general view of Singapore's financial district at night on Jan 7, 2020. (Photo: Roslan RAHMAN / AFP)

SINGAPORE: Singapore will take several measures to safeguard its energy supplies amid global disruptions that have pushed prices up.  

In a media release on Tuesday (Oct 19), the Energy Market Authority (EMA) laid out three pre-emptive measures, which include setting up standby fuel facilities for power generation companies (gencos) to draw upon to generate electricity if needed.

"We are working closely with all gencos to track their fuel supply levels and generating capacity, and 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," the authority added.

EMA said it has also informed gencos to contract sufficient fuel to at least meet the demands of customers of their retail arms. 

Companies looking to sell their excess natural gas supply have been informed to provide EMA and other gencos with the first right of refusal, before they can divert or sell it to other parties.

Finally, gencos will be directed to generate electricity using fuel from the standby facilities if needed, to maintain system stability, said EMA.

"These pre-emptive measures are extraordinary but necessary to secure our fuel and electricity supply. We will review if these measures are still needed by Mar 31, 2022," it added.

"During this period, we urge consumers to conserve energy where possible. EMA will continue to monitor developments in the global and domestic energy sector closely and will introduce further measures if necessary."

EMA noted over the weekend that the “exceptional” circumstances in the energy market have caused several electricity retailers to cease operations. Best Electricity on Tuesday became the third retailer in a week to announce its exit from the Singapore market, following similar announcements by Ohm Energy and iSwitch.

Union Power said on Monday that it is dropping 850 accounts amid high energy prices.


About 95 per cent of Singapore's electricity is generated from imported natural gas, and the higher fuel prices globally will push up the cost of electricity. 

EMA noted several factors that have disrupted supplies and sent global market prices to new highs - "a confluence of increased gas consumption" from recovering economic activity, severe weather events and a series of gas production outages.

"This has been compounded by low inventory levels in the major economies for the coming winter season," it added.

"The tight gas market has also created ripple effects on electricity markets, pushing prices up and driving fuel substitution in favour of coal and oil. Governments around the world are taking measures to secure sufficient fuel supplies."

On supply disruptions, EMA cited upstream production issues in Indonesia’s West Natuna gas field that is estimated to last until the end of the year. Gas pressure from South Sumatra has also fallen due to higher demand from users upstream and in Singapore, it added.

The global energy crunch has made it significantly more expensive for gencos to secure additional spot liquefied natural gas to make up for the drop in piped supplies, EMA said.

While most consumers have been "cushioned" from the price volatility in the wholesale electricity market due to the standard price plans with retailers or regulated tariff, EMA said those on retail rates may see an increase in electricity prices at the point of contract renewal. 

For electricity retailers that have chosen to exit the market, EMA reiterated that it will ensure a smooth transition for affected customers.

"They will not face any electricity supply disruption and retailers will not be allowed to charge an early termination fee," it said, adding that household consumers will have their security deposits returned after any outstanding charges are offset.

Under Singapore's Open Electricity Market (OEM), consumers have the choice of buying electricity from SP Group at the regulated tariff, or from electricity retailers at a price plan that suits their needs. 

About half of household consumers in Singapore have switched to buying electricity from OEM retailers.

Source: CNA/nh(gs)