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Electricity prices in Singapore are impacted by developments that happen around the world as we rely mainly on imported sources to produce electricity.
Factors Influencing Prices
As a resource-constrained country, Singapore relies on imported natural gas for around 95% of our electricity supply. This means that energy developments around the world will impact our domestic electricity prices.
For instance, in the last quarter of 2021 and 2022, there were episodes of extreme volatility in the wholesale electricity market due to the spike in global fuel prices and disruptions in gas supply. As a result, electricity prices increased significantly especially for consumers who were buying at wholesale electricity prices.
Global energy markets remain volatile in view of geopolitical tensions and inflationary pressures. Together with factors such as higher electricity demand in Singapore, wholesale electricity prices may remain elevated.
Consumers who are purchasing electricity at wholesale electricity prices could pay significantly more for their electricity compared to those buying at the regulated tariff from SP Group or via a retail contract from an electricity retailer. Consumers are therefore encouraged to buy electricity from electricity retailers or the SP Group at the regulated tariff for greater price certainty.
Thus, over time, consumers who are signing up or renewing their retail contracts can continue to expect higher electricity rates than before. This reflects the higher cost of fuel and electricity generation, which other countries also face.
Stabilising the Energy Market
EMA has put in place the following measures such as the following to enhance Singapore's energy security and resilience:
Institutionalised the setup of a Standby LNG facility (SLF), which generation companies (gencos) can draw from to generate electricity when their natural gas supplies are disrupted.
Directed gencos to maintain sufficient fuel for power generation, based on their available power generation capacity for power generation. This is in addition to the existing requirement of having fuel reserves that gencos are required to maintain under their licences.
EMA has also implemented the Temporary Price Cap (TPC) mechanism to address extreme price volatility in the Singapore Wholesale Electricity Market (SWEM). The mechanism acts as a “circuit breaker” that kicks in when there is significant and prolonged volatility in the SWEM. Once wholesale electricity price returns to normal levels, the TPC mechanism will be deactivated.