Singapore’s plan to import electricity – as set out in a consultation paper by the Energy Market Authority last week – is currently a one-way document which does not present the possibility for gencos here to export spare electricity to neighbouring countries as well.
It covers, for instance, the issue of licensing for authorised importers, but is silent on exports.
PowerSeraya – which in May this year did the first commercial power sales to Malaysia’s Tenaga Nasional – could only do so after getting an ‘exemption’ from the EMA under Singapore’s Electricity Act, and following approval from the Trade & Industry Minister.
EMA’s proposed electricity imports of up to 600 megawatts per source country, which is quite sizeable, should also not undermine the billions of dollars in investments here, by both foreign and local corporations, in power generating capacity, industry officials here say.
‘Singapore has to look beyond just importing, but also exporting electricity, and by doing so, help contribute to bringing about a regional market for electricity,’ suggests PowerSeraya CEO John Ng.
Concurring, Tuas Power president and CEO Lim Kong Puay said that any changes in the market structure here to allow for electricity imports should similarly also provide for exports. Besides, the plan to lay submarine power cables to connect the overseas power sources to the Singapore power system to facilitate imports means that the physical connections for exports will also be available.
Electricity exports will also be in line with EMA’s statement that ‘the new electrical interconnections with neighbour countries for electricity imports will contribute towards achieving the longer-term vision of an Asean power grid’ that will enhance regional electricity supply security and cost-competitiveness.
Other pluses, cited by EMA, for electricity imports include that it will allow ‘Singapore to gain access to new energy options that may be unavailable or economically unfeasible’, like coal or hydro. Furthermore, ‘as overseas power producers could have access to lower-cost fuels, labour and land, they can offer electricity at cost-competitive prices’, it added.
While the regulator is mindful that electricity imports should not undermine the integrity of the power system here, its proposal to ‘mitigate concentration risk by spreading imports across various sources’ and allowing in up to 600 megawatts per source country is alarming the industry. This is more than the previous import ceiling of just 600 MW.
Given that Singapore’s peak demand is currently 6,000 MW, imports from, for instance, just two source countries, say Malaysia and Indonesia, works out to 20-25 per cent of this.
And while Singapore is planning for electricity imports only starting from 2017/2018, ‘usage demand growth in electricity here, which has been around 3-4 per cent per annum in the last decade, is expected to be very muted, going forward,’ PowerSeraya’s Mr Ng said.
This suggests that the current capacity overhang – of 9,000 MW chasing 6,000 MW of demand, with another 3,000 MW of new capacity coming onstream in the next few years – will remain for a while.
Tuas Power’s Mr Lim says that in this regard, Singapore should be mindful that electricity imports not undermine the multi-billion dollar investments by gencos in gas-firing plants here which helped underpin the development of the S$1.7 billion Singapore LNG terminal project.
Another industry source added that the electricity imports should also not compromise the long-term piped gas and LNG deals by others like Sembcorp, Gas Supply Pte Ltd and BG Group.
‘As the EMA plan is strategic and long-term, with electricity imports starting from 2017, and carried out by licensed importers for some 20 years, it’s very important not to analyse the proposal in isolation, but to look at the bigger global picture,’ the source said.
‘We should also look at issues like whether there will still be piped gas supplies to gencos here in future, on one hand, and also the technical details like whether, going forward, there will still be non-contestable consumers here (which a hedging contract by importers is meant to benefit), on the other’.
