EMA can impose power rationing during an emergency under proposed law

The Energy Market Authority (EMA) will be able to direct generation companies and consumers to ration power in an emergency to maintain the stability of the power system, under proposed laws introduced in Parliament on Aug 6.

The proposed legislation will allow EMA to prepare for potential emergencies, an issue that took on importance in the wake of the global energy crisis from 2021 to 2022.

The crisis, which highlighted the risks of prolonged power supply disruptions, was sparked by a variety of factors. They included the economic rebound from the Covid-19 pandemic outpacing available energy supply, and Russia’s invasion of Ukraine.

Singapore currently relies on 95 per cent natural gas in its electricity mix. In 2021, soaring electricity prices caused six retailers to fold and exit the market.

The Ministry of Trade and Industry (MTI) and EMA told The Straits Times that Singapore avoided electricity supply disruptions then by implementing pre-emptive measures on top of existing system buffers. These included standby fuel facilities for generation companies to draw upon if needed.

Power rationing can be undertaken as a last resort in severe and sudden fuel or electricity shortages in which system buffers, fuel reserves and other responses to the emergency are insufficient, they added.

“Power rationing seeks to maintain the overall stability of the power system, and ensure that loads critical to security, economic and social needs continue to be served, while we work to restore our energy supply and return to normalcy.

“Consumers will be notified in advance ahead of power rationing, and encouraged to implement voluntary power cuts where possible. EMA will engage consumers and relevant stakeholders as it works out the prioritisation plan to implement power rationing during emergencies,” said the authorities.

The Energy Transition Measures and Other Amendments Bill is meant to help EMA introduce new guardrails for Singapore’s electricity market, strengthen the authority’s ability to regulate the power sector, and establish a fund to support investments for Singapore’s energy transition.

The Future Energy Fund was announced during Budget 2024, and will receive an initial injection of $5 billion.

“This will support Singapore’s adoption of low-carbon energy sources, which will likely involve nascent technologies, high capital expenditure, and exposure to significant commercial and geopolitical risk,” said MTI and EMA. For example, money from the fund could be used to build new hydrogen terminals and pipelines, should Singapore decide to adopt and scale up the use of hydrogen.

MTI and EMA said the Government will ensure the funds are used prudently.

At the same time, the Bill will allow MTI and EMA to establish a central gas entity to aggregate the demand for gas from power generation companies and centralise gas procurement for the power sector.

EMA will regulate the central gas entity, and power generation companies will be required to procure gas solely from the entity.  

Currently, power generation companies individually decide on the volume and tenure of gas to procure based on their own commercial considerations. However, this does not provide the assurance that Singapore will always have the gas supplies to meet its needs, especially when market conditions are volatile, EMA said previously.

Given Singapore’s limited size, there may also be instances where electricity or gas companies will need to access critical infrastructure owned by other entities, in order to carry out their functions.

EMA will be able to direct owners of critical infrastructure to enter an agreement with these companies that allows them to use this infrastructure in times of need, if it is in the public interest to ensure energy security and reliability.

The agency may also be allowed to recover its costs in implementing new initiatives that strengthen energy security, develop a competitive energy market and support the transition to green energy from those who might benefit from the initiatives.

EMA said it would exercise its powers to recover the costs only when necessary and with due care so that energy costs are kept in check.

“EMA will ensure stakeholders are consulted and given adequate notice prior to introducing new initiatives and associated costs, which will be transparently communicated,” said MTI and EMA.

The authorities noted that given the energy transition and the limited availability of land earmarked for public utilities, owners of existing energy infrastructure might want to turn it into other uses, even if the infrastructure is required for energy security and reliability.

However, owners will be required to seek EMA’s approval before repurposing key electricity and natural gas assets, such as power generation units, transmission cables and gas pipelines.

For example, natural gas pipelines and receiving facilities can be repurposed to transport carbon dioxide for underground storage, said the authorities.

In assessing these requests, EMA will consider the owners’ needs and circumstances, while ensuring that overall energy security and system reliability are not compromised.

Proposed changes to the Building Control Act were also introduced in Parliament on Aug 6. The amendments will expand the environmental sustainability regulation for existing buildings and require energy-intensive buildings to make improvements to become more efficient.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

Calls to prioritise safety in debate on food donation law after recent food poisoning episodes Bill to implement stronger protections for platform workers tabled in Parliament