Electricity Futures Market
The Energy Market Authority (EMA), in partnership with
the Singapore Exchange (SGX) and the electricity industry, launched the
Electricity Futures Market in April 2015. This is part of EMA’s ongoing efforts
to enhance market competition for the benefit of consumers. Based on the
experiences of countries like Australia and New Zealand, an Electricity Futures
Market leads to a more efficient and competitive wholesale and retail market with
long-term benefits for consumers. These benefits include more competitive
prices and greater retail choices. A study commissioned by EMA showed that
based on the benefits realised by consumers in other jurisdictions, the equivalent
net consumer benefits could amount to about $2.20/MWh (more information can be
found in Sapere Research Group’s Report).
More information on electricity futures trading can be found on SGX's website.
Futures Incentive Scheme
EMA has launched the Request for Proposal (RFP) for the 2nd
Futures Incentive Scheme to provide Market Making Services for the period of 1 February 2020 to 30 June 2020. The RFP document can be found here.
EMA had selected the following 6 Applicants to provide Market Making Services for the 1st Futures Incentive Scheme for the period of 1 August 2018 to 31 January 2020. The two-way price making spread is $1/MWh or 2% of the bid price, whichever is lower. The RFP Price was S$218,000.00 per month.
1. DRW Singapore Pte Ltd
2. ENGIE Global Markets, Singapore Branch
3. Epoch Energy Solutions Pty Ltd
4. Fenix One Asia Pte Ltd
5. Liquid Capital Australia Pty Ltd
6. RCMA Asia Pte Ltd
How can you or your company benefit from an Electricity Futures Market?
electricity retailers (i.e. not linked to any power generation company) are entering
the Singapore market. They are able to do so because the Electricity Futures
Market helps them to hedge their risks. Their entry enhances market competition
and keeps electricity retail prices competitive.
Food & beverage retailer Coastes shared that it has been able
to shop around for competitive packages from independent electricity retailers.
"We have benefited with lower energy costs. We're also in
discussion with retailers like CPvT Energy to install organic photovoltaic
solar films with storage batteries on our premises, for more efficient solar
In the Sep 2015 tender results (shown below) for the
supply of electricity to Town Councils, 10 Town Councils were able to enjoy 22% discount off SP tariff - an
additional 7.5% in savings compared to the most competitive quote from an existing generation company and retailer. This amounts to about $2.1 million savings a year, which will eventually
benefit electricity consumers.
The benefits of more competitive prices are not only confined to electricity consumers who buy from independent retailers. Due to the competition from the entry of more players, existing generation companies and retailers are also offering greater discounts to customers. This is reflected in their more attractive bids in a subsequent Town Council tender in Nov 2015 (shown below). Hence the Electricity Futures Market brings about benefits to consumers across the board, and not just to those who participate directly in the Electricity Futures Market.
More retail options
The Electricity Futures Market has also enabled new business models to emerge, allowing retailers to offer customised retail packages according to consumers’ needs. There are now even retail packages that use clean energy sources such as solar. Examples of new retail offerings include:
- Rooftop leasing plans: Businesses can lease out their rooftop space for the installation of solar panels.
- Green tariffs: Pricing plans which allow consumers to choose the amount of green energy.
booking company, Chope, shared how it has benefited from new retail plans
offered by independent retailers: "We were
motivated to make the switch as we were looking at ways to reduce our carbon
footprint, and Sun Electric’s provision of sustainable energy that is both
affordable and clean, made perfect sense.
Furthermore, we’re excited to be one of the first companies in Singapore
to run on solar energy, and hope that more companies will take the leap and
make the switch in the near future."
“Apple will be the first company (in Singapore) to rely entirely on solar
energy.” Apple plugs into solar power in Singapore with Sunseap, Straits
Times, 16 Nov 2015
use electricity futures prices available on the SGX website as a benchmark to
assess if the prices offered by their retailers are competitive. For example,
your company can use the futures price from Q3 2016 to Q3 2018 to evaluate a two-year
tender for electricity supply called in Q2 2016.
“From blended power solutions to electricity futures and even a
crowdsourcing exchange, Singapore is making huge stride.” Business Times 22 Jun 2015, New business models set to shake up
solar energy sector.
developed a risk management tool in collaboration with Sapere Research Group
and in consultation with electricity retailers. The objective is to provide
retailers with an understanding of their financial resilience in adverse market
conditions. More information can be found through the tool
with its accompanying primer.
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