Singapore’s draft power market rules seen signalling tighter state control over energy transition

Adopting renewables and electricity imports adds to security concerns posed by global gas market volatility. Investors’ cold shoulder towards fossil energy could also threaten the longevity of Singapore’s gas plants, analysts say.

Senoko plant photo
Senoko Energy's power plant, largest in Singapore, meets 20 per cent of the city-state's energy needs through natural gas. Image: Senoko Energy

Six years ago, Singapore fully liberalised its national electricity market, completing a reform that started in the 1990s as the first of such efforts in Asia. Residents and businesses today choose subscription plans from a handful of retailers competing to provide cheaper and cleaner power.

Now, regulators are signalling the need for greater state control, even as private utility players remain welcome. The Energy Market Authority (EMA) said last week it wants to be able to govern access sharing for critical infrastructure, and vet plans when owners of important power assets intend to repurpose their property.

EMA also sought authority to enact emergency power rationing, and to collect fees for new market development and decarbonisation initiatives. There could be minimum natural gas contracting obligations for power generators to ensure each has sufficient stocks, as part of Singapore’s efforts to centralise procurement of the fuel. All the proposals are up for public feedback till early June.

Observers say these measures point towards Singapore preparing for worst-case scenarios, as it leaves behind three years of power price volatility but enters uncharted territory with clean power imports, erratic global climate patterns and geopolitical instability.

Singapore could also be trying to ensure its clean energy transition progresses at a manageable pace, against a growing antagonism for fossil fuels among financiers, they add.

“We’re seeing an additional tightening of control and influence over the market in a broad sense. A lot of these are about creating emergency resilience,” said Dr David Broadstock, senior research fellow at National University of Singapore’s Sustainable and Green Finance Institute.

The power rationing proposal – which EMA has said is a “last resort” move – is arguably the most salient of such emergency safeguards. Analysts told Eco-Business this could be seen as a regulatory gap finally plugged, but also pointed to more risks ahead.

For instance, greater future use of renewables will bring intermittency risks, while geopolitics could disrupt gigawatts worth of future clean electricity imports from neighbours – even as regional relations look good for now – Broadstock said. Singapore and Indonesia’s outgoing leaders reaffirmed commitment to electricity trade in their last formal meeting in April.

He added that international gas supply remains prone to shocks such as harsh winters, where Europe and China would snap up shipments of the fuel that Singapore relies on for its electricity. The city-state has faced multifold jumps in power prices since 2021 as Covid-19 recovery and the Russia-Ukraine war disrupted gas markets, causing some power retailers to fold.

EMA has not said how exactly power rationing would work, but referenced French and German regulations in its public consultation. Both of the European countries prioritise cutting power to industry before households – lest residents freeze in winter without heating.

Meanwhile, analysts see the proposal for utilities to seek permission before repurposing critical assets as defence against Singapore’s gas plants closing prematurely from stakeholder pressure. Eight gas plants today provide over 95 per cent of the city-state’s electricity, and more units are being built.

“If today I’m a private company with gas power, my stakeholders may be telling me it’s time to divest, to get out of the gas game. As a company, that seems like a choice I should very seriously consider,” Broadstock said. Government backing for power plants to stay on as critical assets could help buttress against such pressures.

EMA’s proposal reflects the challenge that Singapore currently has few fuel alternatives, and will need gas-based power for some time, he added. Singapore is said to be too cloudy and land-scarce for going big on domestic solar, while its winds and tides are also too calm.

Such rules are not unique to Singapore. Henning Gloystein, director of energy, climate and resources at political risk consultancy Eurasia Group, noted that Germany has “aggressive” power sector greening plans, but has shielded new gas plants as critical assets.

Germany wants its power supply to be climate neutral by 2045, and for 80 per cent of its electricity covered by renewables as early as 2030. The country is concurrently seeking 10 gigawatts of new gas generation capacity – with the condition they switch to hydrogen fuel later – after it decommissioned its last nuclear reactors last year.

Despite Singapore’s energy security risks, there remain concerns that the latest slate of proposals could impinge too much on the city-state’s free power market.

“I would say there is a risk of some pushback, with companies feeling like they’re unable to operate in a competitive landscape,” said Marc Allen, energy consultant and co-founder of Singapore climate-tech firm Unravel Carbon, of the suite of proposals.

The best way could be for the government to moderate its approach through recommendations, and step in to implement a safety net when businesses “cannot get it together”, Allen added.

EMA, for its part, has stressed many of its ideas are for contingencies. Powers to direct and arbitrate for infrastructure access sharing agreements will only be exercised where necessary for public interest in energy security and reliability, it said.

An EMA spokesperson told Eco-Business that such instances could include facilitating access to existing switch-houses and jetties on the island for power importers, “where it is infeasible or costly to install new infrastructure due to shortage of suitable land”.

On the proposal to recover costs from market players and consumers for “energy security, market development and decarbonisation-related services”, EMA said it will be done “when necessary and with due care, to ensure that overall electricity costs are kept in check”. Gloystein said such interventions could increase financing risk for investors.

Broadstock believes the measure points to funding for Singapore’s backup generators. These facilities are useful for energy security, but as they are usually offline and not generating revenue, they could struggle to attract private financing. A 680 megawatt (MW) development is being helmed by EMA’s own subsidiary for mid-2025, though private utility PacificLight Power is managing a smaller 100MW standby project.

Overall, the suite of proposals appears strict but sensible, Gloystein said.

“Every industrialised nation at the moment needs to rethink the energy transition, on affordability and financing … I think that is where the Singapore government is trying to change regulation and the market, with a bigger, stronger hand to guide investments,” he said.

Beyond policy changes, Singapore will also need to realise its grid interconnection projects with its neighbours to ensure energy security, Gloystein said, pointing to how regional grids in Europe have saved it from winter blackouts despite a stretched fuel situation.

Dr Alvin Chew, senior fellow at the S. Rajaratnam School of International Studies in Singapore’s Nanyang Technological University, added that Singapore also needs to pursue nuclear energy to alleviate its energy security challenge.

“If we do not start to plan to inculcate nuclear energy as part of our energy transition, the notion of energy security will always be haunting us,” Chew said.

Singapore has in recent years indicated an increasing interest in nascent small nuclear reactors, but has repeatedly said there is no decision to move forward on developing atomic power.

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