Electricity Prices on the Rise
As a resource-constrained country, Singapore relies on imported natural gas for around 95% of our electricity supply. This means energy developments around the world will naturally have an impact on Singapore’s electricity prices.
For several years, the Uniform Singapore Energy Price (USEP) had been depressed below the full cost of producing electricity. This arose from intense competition among power generation companies (gencos) which had over-invested in generation capacity and over-contracted for gas. Retailers were therefore able to offer retail electricity prices below the full cost of production, by buying underpriced electricity from the Singapore Wholesale Electricity Market (SWEM).
In 2021 and 2022, global energy prices have risen sharply due to the global energy crunch of high demand and tight supply conditions. Natural gas demand increased due to recovering global economic activity, while supply became tight due to supply disruptions, production outages to geo-political tensions.
Such demand and supply factors as well as the occasional tripping of power generation sets, saw greater volatility in the half-hourly pricing in the SWEM.
Most consumers are not affected by the price volatility in the SWEM as they are on standard price plans (i.e. fixed price plans or discount off tariff plans) with retailers or on the regulated tariff with SP Group. However, these consumers can expect to see higher prices when they renew or enter into new retail contracts, as the contracts will reflect the higher cost of fuel and electricity generation.
Stabilising the Energy Market
To enhance Singapore’s energy security and resilience, EMA put in place a set of measures in October 2021. This helped to ensure Singapore’s overall gas supplies remain sufficient during this global energy crunch. These measures include:
- Establishing a Standby LNG facility (SLF), which generation companies (gencos) can draw from to generate electricity when their natural gas supplies are disrupted.
- Directing gencos to maintain sufficient fuel for power generation, based on their available 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.
- Modifying Market Rules to enable EMA to direct gencos to generate electricity using the gas from the SLF pre-emptively, if there are potential shortages in energy supply in the SWEM, to maintain power system security and reliability.
||Average USEP ($/MWh)
| March 2021
Households and businesses with an average monthly electricity consumption of below 4,000 kWh may either purchase electricity from retailers under retail price plans, or from SP Group at the regulated tariff. This arrangement is intended to protect small consumers who have less bargaining power to negotiate with gencos and retailers for better retail prices compared to the regulated tariff.
Some large consumers (those with average monthly consumption of at least 4,000 kWh) have been transferred to buying electricity at wholesale prices from SP Group, either due to their retailer exiting the market or had faced difficulty in securing or renewing their contract. Under this default arrangement, SP Group purchases electricity on these consumers’ behalf from the SWEM at the prevailing WEP. SP Group then passes through the WEP to consumers.
Support for Large Consumers
EMA has made our standby LNG facility (SLF) available to the gencos so that they can offer rolling fixed price retail contracts to large consumers. This is the Temporary Electricity Contracting Support Scheme (TRECS). Although the monthly TRECS contracts reflect the prevailing high fuel prices for power generation, they provide large consumers with a viable option to reduce their exposure to volatile electricity prices.
EMA has worked with Keppel Electric Pte Ltd and Sembcorp Power Pte Ltd to offer longer-term fixed price plans for consumers with average monthly consumption of 4,000kWh to 50,000kWh. These plans come with a contract duration ranging from 6 months to 3 years.
Several retailers are also offering price plans with a significant fixed price component for larger consumers. Retailers offer more of such plans, as compared to TRECS, as it reduces their risk in being exposed to high wholesale electricity prices in the event of unplanned outages.
More information on these electricity contracting options can be found here.
Should large consumers face difficulty in securing a retail contract, they may contact EMA at email@example.com for further assistance.
Please refer to our FAQs
for further information on electricity prices and energy security.
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