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8/10/2019 Singapore Electricity Market
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Singapores Electricity
Market after Market Reform
David Tan
Deputy Chief Executive
Energy Market Authority
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Timeline of Market Reform
Regulatory Principles and Tensions
Outcomes of Market Liberalisation
Agenda
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Public Utilities Board (PUB) has been the sole
provider of electricity in Singapore up to 1995.
Infrastructure is built to meet forecasted demand.
Upward pressure on prices has led the Government
to ask whether the industry is as efficient as it is, as
the electricity system continues to grow.Competition through industry reforms would
encourage companies to be cost-efficient.
Before Liberalisation
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Electricity Industry Structure in 1995
IPPsSembCorpCogen Pte
Ltd
ENV TuasPower LtdSingapore Power Ltd
Contestable Business
Non-contestableBusiness
FranchisedConsumers
Non-franchisedConsumers
Progressiveextension ofcompetition
Non-franchised
Sector
UtilitiesSupportServices
FranchisedSector
T&D PoolOperations
SystemOperations
PowerGrid Ltd
SerayaJurong
PowerSeraya LtdSenoko Power Ltd
PP GT Senoko
Private ElectricitySuppliers
Non-franchised
Sector
UtilitiesSupportServices
Power Supply Ltd
since Apr 98
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New power companies were not forthcoming in
investing in new plants, since Singapore Power
owns grid and generation.
In 2000, Govt took further steps in industry reform:
separation of the natural monopolies (i.e. grid) from
the competitive domain (i.e. generation and retail)
Grid remained under Singapore Power, while each
power plant was set up as a separate company to
compete with one another
Industry Reforms (2)
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EMA was formed in 2001 as the industry regulator
and power system operator.
Energy Market Company became the market
operator.
New generation companies came into operation:
SembCorp Cogen in 2001 and Keppel MerlimauCogen in 2007. Island Power Company is expected
to come into operation in 2010.
Industry Reforms (3)
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T&D
PowerGrid Ltd
IPPsENV(now NEA)
Tuas PowerLtd
Senoko PowerLtd
PowerSerayaLtd
Power Supply Ltd(now SP Services Ltd)
Franchised (Small)Consumers
Non-franchised (LargeIndustrial & Commercial)Consumers
Market to befully opened
ultimately
ElectricityRetailers
Energy Market Authorityof Singapore
Electricity Flow
Singapore Power Ltd
MarketOperator
IndustryRegulator
SystemOperator
Energy MarketCompany Pte Ltd
Electricity Industry Structure in April 2001
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National Electricity Market of Singapore (NEMS)
commenced operation in Jan 2003.
Vesting Contracts was introduced in Jan 2004 to
curb vesting contracts.
Interruptible Load Supply was introduced in 2004
consumers can offer to have their electricity supplyinterrupted in exchange for payment from the
reserve market.
Industry Reforms (4)
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Industry Reforms (5) Retail Contestability
Phase II Phase III
started
Jun 2003
HT consumers
LT consumers
with average
monthly
consumption
exceeding
20,000 kWh
About 5,000
consumers
started in
Dec 2003
LT consumers
with average
monthlyconsumption
exceeding
10,000 kWh
Another 5,000contestable
consumers
Being studied
Remaining one
million
consumers Electricity
Vending System
Phase I
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T&D
PowerGrid Ltd
IPPsENV Tuas PowerLtd
PowerSenokoLtd
PowerSerayaLtd
SP Services Ltd
Franchised (Small)Consumers (1 mil)
Non-franchised (LargeIndustrial & Commercial)Consumers (10,000)
Market to befully opened
ultimately
ElectricityRetailers
Energy Market Authorityof Singapore
Electricity Flow
Singapore Power Ltd
MarketOperator
IndustryRegulator
SystemOperator
Energy MarketCompany Pte Ltd
Electricity Industry Structure in Jan 2003
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Generation Statistics (2007)
12,330 MWLicensed Generation
Capacity
~ 9%System Losses
~ 44%System GrossEfficiency
41,138 GWhEnergy Generated
5,946 MWMax System Demand
79%Natural Gas
3%Others (Incineration,etc.)
18%Fuel Oil
Generation by Fuel Fix
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A good regulatory regime is essential for the freemarket to function efficiently.
Key regulatory objectives :
a) a level playing field
b) transparent rules and consistent application of
rules.c) open access
d) low entry and exit barriers
The most expensive electricity is no electricityElectricity price should be an outcome of a properlyfunctioning market.
Regulatory Principles (1)
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Key market principles:
a) Champion competition, not companies and allowmarket outcomes to be expressed.
b) Market to drive investments, allow entry or exit of
new competitors/products into the market
c) Market to incentivise most cost efficient behaviourd) Market sets electricity price
e) No distortions from subsidies, causer-pays
principle
Price regulate monopolies (the Grid) in a way toincentivise the companies to be cost efficient.
Regulatory Principles (2)
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One outcome of competition is to cause companies
to adopt the most cost efficient technology
Combined Cycle Gas Turbines (CCGTs).
The reliance on gas has thrown up some dilemmas.
Do we need a fuel mix for security? Should wedetermine the fuel mix to be used or should we
leave it to the market to determine what mix of fuel
to be used?
Regulatory Tensions (1)
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Global fuel mix is much more diverse than Spore
Coal
39.6%
Oil
6.7%
Biomass0.9%
Nuclear
15.6%
Others
0.5%Hydro
16.5%
Gas
19.5%
Geotherm
al0.3%
Waste
0.4%
Global Electricity Fuel Mix (2004)
NaturalGas
77.8%SynGas
0.9%
Orimulsi
on
6.9%
Fuel Oil
11.9%
Diesel
0.1%
Refuse2.4%
Singapore Electricity Fuel Mix(2006)
Source: IEA, EMA
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International Comparison
0%
20%
40%
60%
80%
100%
SouthAfrica
Australia
Isra
el
HongKong
Taiwan
US
A
German
y
Denmark
Indones
ia
SouthKorea
NorthKorea
U
K
Irelan
d
Philippines
Malays
ia
Finland
Japan
Netherland
s
Russ
ia
New
Zealan
d
France
Norway
Switzerlan
d
Singapo
re
Coal Hydro Oil Gas Nuclear Renewables
Source: IEA, EMA
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We were dependent on oil for a long time. But the
well developed global markets for oil helped to
ensure that there is always a supplier to buy from even during the oil embargo in the 1970s, we were
able to secure fuel.
Gas enables 2 levels of diversification gas turbines
can be fired by diesel which is stockpiled and the
LNG terminal which is being planned will enable
source diversification.
Regulatory Tensions (2)
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Fuel diversification occurs in large countries and
usually in countries which have indigenous sources
of energy and is usually an outcome of economicviability.
Without adequate economies of scale with each type
of fuel used and without the circumstances to render
the use of each type of fuel viable, fuel diversification
can be a very expensive option.
We are technology neutral and will be an enabler for
what the market decides.
Regulatory Tensions (3)
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By 2007, about 10,000 accounts representing 75%
of electricity consumed in Singapore are
contestable.
EMA is exploring how to leverage on technology(Electricity Vending System) to extend contestability
to the rest of about 1 million domestic consumers
Evident in the rise in electricity tariffs which is
significantly smaller than rise in fuel oil price
Outcomes of Market Liberalisation (1)
Downward pressure of electricity prices
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Electricity Tariff vs Fuel Oil Price
Fuel Oil Prices (S$) vs Low Tension Tariff
38.30 37.1837.18
32.1332.13
42.8445.66
42.42
50.15
43.06 43.3443.12 44.5644.5647.79
52.4049.22
64.87
72.71
80.96 81.23
87.49 88.52
75.73
65.25
77.45
87.46
96.64
19.8717.2117.21
15.0215.02 16.01 16.5115.2417.81 16.56 15.8115.4415.8 15.816.53 16.73 16.06
18.2619.5721.02 20.4921.15 21.64 20.02 18.88
20.52 21.3822.62
0
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Fu
elOilPrices(S$/bbl)
0
10
20
30
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50
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80
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Tariff(/kWh)
Pegged Fuel Price LT Tariff
Fuel oil price has increased by 152%
The electricity tariff for households has however increased by 14%
This is largely due to efficiencies gains in the industry, such as utilizing
more cost-efficient technologies for electricity production.
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CO2 Generated in kg/MWh in Year 2000 and 2007
30% reduction in Carbon Dioxide Generated in kg/MWhSource: CARMA
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Companies are incentivised to:
a) reduce costs (sourcing for cheaper fuel);
b) lower costs of risks (hedge against volatility in fueloil price);
c) adopt the most cost competitive technology (switchfrom steam plants to CCGTs),
d) develop market demand and improve efficiency(adopting combined heat and power plants eg co-gen and tri-gen).
On the whole, market reforms have increasedcompetition among industry players and benefitedconsumers.
Outcomes of Market Liberalisation (2)
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