10 SOLAR PV IN SINGAPORE IN THE ABSENCE OF SUBSIDIES
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provides demand forecasts and network data. These datasets are received
by the Energy Market Company which runs the market-clearing engine
and produces the optimal dispatch solution. The market is cleared for
a system of more than 700 nodes across the island, although the price
differential between different nodes is generally very small.
On the retail side, since 2001, Singapore has progressively lowered
the threshold for consumers who are allowed to purchase electricity
from retailers, known as contestable consumers. Currently, commercial
and industrial consumers with an average monthly electricity consumption of 2000 kWh can be contestable. These consumers account for
about 80% of Singapore’s total electricity demand. Early in 2018, a soft
launch of the open electricity market was conducted in one township
where all consumers are now allowed to change their retailer. Full retail
liberalization was completed in the second half of 2018.
In addition to the physical market, an electricity futures market is run
by the Singapore Exchange since 2015. The futures market was introduced to allow new independent retailers, i.e., those who were not retail
arms of generators, to secure electricity supply at competitive prices and
hedge their risk. This was a particularly important development given that
20 out of the 23 licensed retailers only entered the market after full retail
contestability (i.e., the ability to compete for a consumer’s business) was
announced in October 2015.
Electricity Pricing
Singapore does not provide any subsidies for any form of energy, and
by extension, electricity. The regulated tariff, i.e., the tariff payable by
non-contestable consumers and contestable consumers who chose to stay
with the retailer of last resort, is set by the EMA quarterly based on the
average forward fuel oil price over the past three months. The reason
for linking the electricity tariff to fuel oil price is the prevalence of fuel
oil-indexed pricing for natural gas in Asia as a standard practice. The nonenergy component of the tariff consists of other charges such as a grid
charge, fees for power system operation and market administration, and
the cost of meter reading and billing.
On the other hand, retailers procure electricity from the wholesale
market at the average price of energy at all market nodes, known as the
Uniform Singapore Electricity Price, plus other cost components such as
the overall cost of procuring reserves. They generally offer plans such as
229
provides demand forecasts and network data. These datasets are received
by the Energy Market Company which runs the market-clearing engine
and produces the optimal dispatch solution. The market is cleared for
a system of more than 700 nodes across the island, although the price
differential between different nodes is generally very small.
On the retail side, since 2001, Singapore has progressively lowered
the threshold for consumers who are allowed to purchase electricity
from retailers, known as contestable consumers. Currently, commercial
and industrial consumers with an average monthly electricity consumption of 2000 kWh can be contestable. These consumers account for
about 80% of Singapore’s total electricity demand. Early in 2018, a soft
launch of the open electricity market was conducted in one township
where all consumers are now allowed to change their retailer. Full retail
liberalization was completed in the second half of 2018.
In addition to the physical market, an electricity futures market is run
by the Singapore Exchange since 2015. The futures market was introduced to allow new independent retailers, i.e., those who were not retail
arms of generators, to secure electricity supply at competitive prices and
hedge their risk. This was a particularly important development given that
20 out of the 23 licensed retailers only entered the market after full retail
contestability (i.e., the ability to compete for a consumer’s business) was
announced in October 2015.
Electricity Pricing
Singapore does not provide any subsidies for any form of energy, and
by extension, electricity. The regulated tariff, i.e., the tariff payable by
non-contestable consumers and contestable consumers who chose to stay
with the retailer of last resort, is set by the EMA quarterly based on the
average forward fuel oil price over the past three months. The reason
for linking the electricity tariff to fuel oil price is the prevalence of fuel
oil-indexed pricing for natural gas in Asia as a standard practice. The nonenergy component of the tariff consists of other charges such as a grid
charge, fees for power system operation and market administration, and
the cost of meter reading and billing.
On the other hand, retailers procure electricity from the wholesale
market at the average price of energy at all market nodes, known as the
Uniform Singapore Electricity Price, plus other cost components such as
the overall cost of procuring reserves. They generally offer plans such as