Tackling energy challenges the Singapore way


October 20, 2011

Experts surveying the global energy landscape have warned of a challenging future where power demand is set to double by 2030, even as the world grapples with climate change and the urgency to reduce mounting greenhouse gas emissions.

It is unsurprising, therefore, that energy and energy security have emerged as top concerns for governments worldwide, and in Singapore – a land-scarce urban nation that is almost completely reliant on energy imports – this is no exception.

Policymakers on this small island in Southeast Asia have responded by being flexible and thinking long-term about the future energy landscape.

The cornerstone of that strategy has been the liberalisation and diversification of Singapore's energy market – a process overseen by a statutory board formed in 2001 known as the Energy Market Authority (EMA).

In an exclusive interview with Eco-Business ahead of the upcoming Singapore International Energy Week, EMA chief executive Chee Hong Tat noted that the liberalisation process has made good progress, but it had required rapid adaptation on the part of the EMA in its early days.

"Back in 2001, we were only in the early phase of market deregulation. The newly-formed EMA, which was charged with the task of overseeing the liberalisation process, faced a steep learning curve," said Mr Chee in an email interview.

The EMA studied electricity market models in other countries, primarily Australia and New Zealand, and developed its own model that today allows 75 per cent of Singapore's electricity demand to be met through competitive markets.

Since the EMA was established, Singapore's reliance on fuel oil for electricity has decreased from 75 per cent in 2000 to 15 per cent in 2009. Oil has been replaced largely by natural gas, which is cheaper and cleaner than fuel oil. Today, Singapore generates about 80 per cent of its electricity from natural gas.

Currently, all of Singapore's natural gas supply is piped in from its neighbours Malaysia and Indonesia. This will change with the completion of the Republic's first liquefied natural gas (LNG) terminal in 2013.

LNG is natural gas that is compressed to a fraction of its original volume, which enables it to be easily transported around the world, supplying countries with another source of energy.

Mr Chee noted that the need to protect against supply disruptions prompted the government's 2009 decision to develop the LNG terminal and diversify its fuel mix. "It will enable Singapore to broaden its access to fuel sources from around the world," he explained.

Now that its LNG facility will soon be completed, the EMA will have to focus on securing a steady supply of the fuel, he said. The agency is currently studying its options for obtaining LNG from reliable sources at competitive prices and will launch a consultation exercise next year for the industry.

Even while putting considerable efforts into LNG energy supplies, the EMA recognises the need for other solutions to ensure energy security.

"Unfortunately, there is no silver bullet," said Mr Chee, adding that energy security has become an increasingly complex challenge in light of the twin issues of declining fossil fuel supplies and climate change.

Clean and sustainable energy
Mr Chee shared that the key to energy security is obtaining energy that is competitively priced, diversified and widely available, but that it must be clean and sustainable too.

While Singapore does not have significant renewable energy options such as hydro-power, wind, wave or sufficient land for mass solar energy production, it has not ruled out such possibilities, said Mr Chee.

"We recognise that technology is changing, and energy solutions that are not feasible for Singapore today may become viable in future," he said.

With this in mind, the EMA has committed to working with industry players, research institutions and other government agencies to explore new energy options for Singapore. It aims to position Singapore as a "living lab" for public-private partnerships, or joint ventures between companies and government agencies.

Under the living lab concept, Singapore's agencies give companies the chance to carry out the development, testing and commercialisation of clean technology solutions in a real-life, highly urbanised setting.

Goh Chee Kiong, who is director of cleantech for Singapore's Economic Development Board (EDB) – one of the government agencies that helps develop the public private partnerships for the living lab concept – told Eco-Business that the living lab approach gives Singapore an advantage in attracting global companies from the energy industry.

"Already we are seeing the growth of the clean energy ecosystem in Singapore," he said, noting that projects such as Singapore's Punggol Eco-Town project – a district-level green building project involving EDB, the EMA and Singapore's Housing and Development Board – has attracted companies such as the Japanese electronics firm Panasonic.

In August, the three local agencies inked a public-private partnership with Panasonic to integrate solar technology, fuel-cell batteries and Home Energy Management Systems (HEMS) into an existing public housing block.

The project will also contribute data to an EMA smart grid project called the Intelligent Energy System (IES), which was started in 2009 to determine how best to prepare Singapore's electricity demand and distribution for future energy scenarios that include more renewable energy sources and electric vehicles.

At the same time that Singapore is exploring the effects of electric vehicles on smart grids, its agencies are supporting projects to promote the uptake of electric vehicles. The EMA, EDB and the Land Transport Authority are working with technology companies Bosch and Greenlots on trials involving charging infrastructure.

The EMA and the other government agencies involved in the projects fill the roles of technology partner, talent developer and sophisticated end-user for the private sector, said Mr Goh, adding that EDB supports and connects the partnerships between the suppliers and adopters of innovative sustainable energy solutions.

He noted that Singapore's business-friendly policies have also attracted firms in the renewable energy sector. Global wind energy firms Vestas, DNV and Gamesa have set up R&D centres in Singapore, and Singapore's solar energy research institute (SERIS) has partnered with solar companies such as Norway's Renewable Energy Corporation (REC) and Chinese solar manufacturer Trina Solar.

Other solar companies are benefitting from the recent innovations in Singapore's nascent solar industry. For example, Singapore's first solar leasing agreement was announced last month for Punggol Eco-Town, where the EMA's smart grid study is paving the way for more widespread use of alternative energy initiatives.

Under leasing agreements, building owners who want clean energy without high up-front costs can hire firms such as local solar manufacturer Sunseap Enterprises to install and maintain solar equipment. The building owners can then purchase the electricity from the solar company.

Managing director of Singapore firm Phoenix Solar, Christophe Inglin, told Eco-Business that Singapore agencies have been open to leasing schemes and other initiatives such as allowing commercial properties to feed extra renewable energy they produce into the national grid. They also reward building developers who incorporate clean energy technology into buildings by granting higher green building ratings.

That flexibility has helped the solar industry's recent growth here, he said, but the Government's primary influence has been its determination not to distort the electricity market to provide artificially low power costs to businesses and households.

"Singapore has been in resolute in not subsidising electricity," he said.

Mr Inglin noted that while this has meant that the industry could not rely on the incentives that support the solar industries in parts of Europe, it has led to higher retail electricity rates. The result, he explained, is that as the cost of producing solar energy gets lower, it is becoming commercially viable in Singapore ahead of other markets.

Meanwhile, EMA's Mr Chee said that the EMA will continue to invest in new energy research to enhance Singapore's energy security, widen its range of energy options, improve energy efficiency and lower its carbon emissions.

All these issues will be among the topics discussed at the EMA-sponsored Singapore International Energy Week (SIEW) held from 31 October to 4 November. The event, now in its fourth year, gathers policy-makers, energy experts and industry leaders to exchange ideas that promote long-term global energy security.

It will feature keynote speaker Nobuo Tanaka, former executive director of the International Energy Agency, who will share his views on the current energy challenges facing the world when he delivers the Singapore Energy Lecture.

Other highlights of the week will include the Singapore Energy Summit, a high-level discussion on international energy policy, and a number of concurrent conferences on renewable and conventional forms of energy, smart grids, and energy and carbon trading.

The event, which has attracted more than 14,000 participants from more than 60 countries in previous years, will also feature speakers such as Royal Dutch Shell chief executive Peter Voser, GE Energy smart grid solutions project global director Bartosz Wojszczyk, and the Asian Development Bank director of sustainable infrastructure Gil-Hong Kim.

Mr Chee said that the EMA was hosting the event to contribute to the global debate required to reshape the energy landscape for a more sustainable future.

He noted that to succeed, closer collaboration between the private and public sectors was needed to share innovations and expertise.

"No single country will have all the answers to tackle energy and climate change challenges," he said.

Article published by: Eco – Business, Jenny Marusiak