The Paris Agreement on climate change adopted by 195 nations in December has been hailed by governments as a historic milestone—one which analysts say will herald “the end of the fossil fuel era” and usher in a new age for renewables.
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Clean power—such as from the sun, wind, and waves—is set to become a key part of the global economy, and capital markets are already reflecting this. Clean energy company stocks have been surging; stocks for Norway’s REC Silicon for example, which makes raw material for solar panels, rose 10 per cent in the days following the United Nations climate summit in Paris.
The International Energy Agency in a recent report also noted that 40 per cent of countries which adopted the agreement plan to scale up renewables to reduce their emissions.
Solar energy, in particular, hogged the spotlight at the Paris summit. For example, solar associations from around the world launched the Global Solar Council at the event. This is the world’s first dedicated solar industry body, and its members will support the sector’s development through cooperation, training, and education.
At the summit, Indian Prime Minister Narendra Modi, along with French President Francois Holland also launched a global solar alliance of 120 countries—mostly tropical nations—to share skills and resources to scale up solar adoption globally.
This global push towards solar is good news for sunny Singapore, as it is the only readily available form of renewable energy in the natural resource-scarce city-state.
Singapore plans to tap on renewable power and energy efficiency to fulfil its climate pledge—submitted to the UN last July—in which it will reduce its emissions intensity by 36 per cent from 2005 levels by 2030, and stabilise its emissions around the same year.
The National Climate Change Secretariat (NCCS), in a recent addendum to President Tony Tan’s speech at the opening of Parliament last week, said that the government is studying “ways to harness more clean energy” in reducing Singapore’s greenhouse gas emissions. “Solar deployment will be scaled up from the current 47MWp, to provide around 350MWp of electricity by 2020”, it added.
One key initiative is SolarNova, a project led by the Economic Development Board (EDB) which encourages government agencies to use solar power in a bid to accelerate solar deployment and spur the growth of the industry.
In June last year, HDB called the first SolarNova tender, a 40 megawatts peak (MWp) project which will see solar photovoltaic systems installed at eight sites operated by the Ministry of Home Affairs and PUB, and about 900 HDB blocks across the island.
One company which has enjoyed success even before the Paris summit and is now firmly positioned as the leading player to help fulfil Singapore’s solar ambitions is home-grown firm Sunseap Leasing.
A Singapore success story
The firm, founded in 2011, is one of a group of emerging solar outfits in Singapore—which include, for instance, Solar Horizon, LYS Energy, and Energetix—that are helping speed up solar energy adoption in Singapore.
Sunseap beat 13 other bids to clinch the contract for the inaugural SolarNova tender—Singapore’s largest solar tender to date—in December 2015. It will build a 76MWp project—far exceeding HDB’s 40MWp requirement—on government sites and 831 housing blocks by the end of 2017.
Frank Phuan, Sunseap Leasing’s co-founder and director, tells Climate Challenge in a recent interview that three elements that have helped the company lead the solar sector: engineering experience, creative financial models, and a strong focus on research and development.
While Sunseap Leasing is a relatively recent set-up, Phuan, shares that as early as 1978, his father started Compo Enterprises in Singapore, which made and exported solar systems. The father-son duo eventually set up Sunseap Enterprises, a solar module design and manufacturing outfit, in 2000.
Since then, the Sunseap Group has grown from a team of two to a 55-strong outfit across three companies called Sunseap Leasing, Sunseap Energy and Sunseap International. Sunseap Energy sells clean power to individuals and organisations, while Sunseap International, the company’s overseas arm, has offices in India, Malaysia, Australia, Philippines, and Indonesia.
“Because of our long legacy in the solar industry and years of engineering skills, we are confident of our systems and that they will generate the power and revenue we promise,” says Phuan.
Sunseap has been especially successful in Singapore because it is more familiar with complex and small-scale rooftop installations—where components have to be hauled up to the top of the buildings for use in compact set-ups—than other regional players, which specialise in ground-mounted, large scale systems.
“We are able to do these difficult projects at the same price as larger, easier systems,” notes Phuan. “That makes us very competitive”.
He also credits Sunseap’s success to the financial creativity and innovative business models spearheaded by his co-founder and the company’s director Lawrence Wu.
The firm has worked with financial institutions to design ‘solar bonds’, a form of funding that is more like an investment than a loan, says Phuan. Sunseap’s model of solar leasing, which has gained traction as a low-risk way for customers to take up solar energy, sets it apart from others, he adds.
Sunseap was the first in Singapore to introduce the solar-leasing model, through a project commissioned by HDB.
In a solar leasing model, also known as a power purchase agreement (PPA), the firm installs solar systems for clients and bears the installation, maintenance, and repair costs. Clients only pay the monthly electrical tariff.
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Because of our long legacy in the solar industry and years of engineering skills, we are confident of our systems and that they will generate the power and revenue we promise.
Frank Phuan, co-founder and director, Sunseap Leasing
They can then opt to pay a fixed tariff for electricity for a typical contract duration of 20 years, or, pay variable rates, based on a fixed discount to prevailing electricity prices, according to Sunseap.
Phuan notes that the latter system of variable rates, which guarantees discounts regardless of the price of electricity, is unique to Sunseap. “We take a risk, and nobody else signs a PPA like that”, he says.
Research and development is also a top priority for Sunseap, notes Phuan. For example, the team recently developed and patented a ‘mobile solar system’, which Phuan says can dramatically scale up solar adoption in Singapore.
This involves solar panels mounted on high-density plastic structures, which makes them lightweight and easy to move from one point to another. They are also suitable for use on both land and water.
There are many plots of land in Singapore which are earmarked for development but are currently vacant, he explains, citing Singapore’s offshore landfill on Semakau Island as an example. These are ideal spots to install solar farms, but land owners currently do not allow the land to be used for this purpose.
But if they were to give permission, Sunseap can install its mobile solar systems on the vacant land, and simply cart them away when development begins.
“Generating solar over a large land area would create economies of scale, and allow more consumers to buy clean energy at an affordable price,” says Phuan.
These temporary solar farms are a creative way to implement solar energy quickly, he says, adding that Sunseap is exploring this idea further.
The company’s strengths have positioned it as Singapore’s largest clean energy provider today, generating enough electricity to power more than 2,000 residential blocks, or 500,000 households.
It snagged another landmark contract last November when American technology giant Apple signed a deal to buy 100 per cent of the power for its Singapore operations from Sunseap. The 33MW of power Apple needs will be generated from systems built by Sunseap on 800 buildings across Singapore.
But while the awareness of the potential of solar energy is growing, many smaller companies that could adopt solar are still in the dark, says Phuan. But this is slowly changing post-Paris, and more firms are inquiring about how solar can help them cut not just costs, but emissions, he notes.
Achieving Singapore’s climate goals
Industry observers agree. Kavita Gandhi, executive director of non-profit industry body Sustainable Energy Association of Singapore (SEAS) notes that both solar and energy efficiency initiatives are uncharted territory for many small and medium enterprises (SMEs) who are more concerned with minimising costs and raising productivity.
“SEAS is doing its part to overcome this knowledge barrier by offering introductory training courses for companies to answer basic questions such as what solar energy is, what its benefits are, and how companies with vacant roof space can make better use of it,” she says.
Michael Quah, professor at the National University of Singapore’s department of chemical and biomolecular engineering, says that it is important for Singapore to invest in creating cheap and reliable storage solutions, which could help the country increase the share of solar in its peak electricity demand beyond the government’s eight per cent estimate.
“But in the absence of effective solutions, the stability, resilience, and reliability of the grid remain key concerns,” he says.
Improving energy efficiency—especially in Singapore’s carbon-intensive industries such as petrochemicals—has the most potential to help meet the country’s climate targets, he adds.
Other, less intermittent sources of clean energy—such as waste-to-energy—could also play a larger role in Singapore’s energy mix in the future, notes Quah.
This technology is already in use in Singapore’s incineration plants, and Sunseap is also conducting research into new applications for waste-to-energy in Singapore and the region, shares Phuan.
“The UN climate deal is a landmark achievement, but we shouldn’t lose momentum after reaching this milestone,” he says. “Sunseap intends to accelerate clean energy deployment in the region in a sustainable, cost-efficient manner.”
This article was first published on the NCCS website. Subscribe to their newsletter here or follow them on their Facebook page.
