Centralised Process to Ensure Sufficient Generation Capacity

10 Apr 2023

The Energy Market Authority (EMA) is seeking views and feedback from the public and industry on the proposed centralised process to facilitate and guide private investments in new generation capacity.

Need for Centralised Process

2. Over the past two decades, investments in new power generation technology and capacity have been driven by the commercial considerations of power generation companies (gencos), which may include factors such as their own business plans, outlook of electricity demand and price signals in the Singapore Wholesale Electricity Market (SWEM). While each genco makes rational decisions individually, this may not result in sufficient generation capacity to meet demand at the system level. The uncertainties brought about by the energy transition and concerns over potential stranding of assets may make long-term investment decisions in generation capacity even more challenging for private gencos.

3. To ensure that we have sufficient generation capacity in the future, the Ministry of Trade and Industry (MTI) announced in October 2022 that EMA would be introducing a Centralised Process to coordinate the planting of new generation capacity.

Proposed Framework

4. Under the Centralised Process, EMA will continue to forecast: (i) electricity demand on a rolling 10-year basis; and (ii) the generation capacity available in the system. Should the projections show that there is insufficient generation capacity to meet system needs, EMA will conduct a Request-for-Proposal (RFP) for the private sector to build, own and operate the required new generation capacity. EMA will step in to build the required new generation capacity if there is no private sector interest to do so or the proposals submitted are assessed to be unsuitable.

New Generation Capacity Required by 2028

5. EMA intends to launch the first RFP for new generation capacity required in 2028 in the second half of this year. Based on EMA's preliminary forecast, system peak demand in Singapore is projected to grow at a compounded annual growth rate of 4% - 6%, with demand reaching between 10.1 gigawatts (GW) and 11.7GW by 2028. Additional power generation capacity will therefore be needed by 2028. More details of the first RFP will be released in due course.

6. Further details on the Centralised Process can be found at the EMA website (go.gov.sg/ema-consultation-centralised-process) and the REACH website (go.gov.sg/reach-centralised-process). We welcome views and feedback from the public and industry on the proposed Centralised Process. Interested parties who wish to submit their feedback can reach out to the points-of-contact indicated in the consultation paper. The consultation, which opens today, will close on Monday, 8 May 2023, 5pm.

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