Transition to low-carbon electricity generation sources: Consultation on Energy (Resilience Measures and Miscellaneous Amendments) Bill

10 September 2021

The Ministry of Trade and Industry (“MTI”) and the Energy Market Authority (“EMA”) have launched a public consultation to seek feedback on a draft of the Energy (Resilience Measures and Miscellaneous Amendments) Bill (“Bill”). The draft Bill sets out proposed amendments to the Energy Market Authority of Singapore Act (“EMA Act”), Electricity Act, Gas Act, and District Cooling Act 2001, to enable the transition (through a multi-decade programme by MTI and EMA) from electricity generation to low-carbon generation sources, while ensuring the sustainability, security, and reliability of the power sector (“energy transition”). The public consultation closes on 16 September 2021.

Details of the key proposed amendments under the Bill are set out below.

Background

In line with the strong commitments which Singapore has made to reduce carbon emissions as part of its enhanced 2030 Nationally Determined Contribution and Long-term Low-emissions Development Strategy, MTI and EMA are embarking on a multi-decade programme to transition Singapore’s electricity generation to low-carbon generation sources through the four supply “switches”, specifically by:

  • enhancing the energy efficiency of natural gas power plants;
  • accelerating solar deployment;
  • tapping on regional power grids for low-carbon electricity imports; and
  • developing low-carbon solutions such as hydrogen and carbon capture, utilisation and storage solutions which will enable decarbonisation in the longer-term.

As almost all the existing natural-gas fuelled power plants will retire over the next one to two decades as they reach their end-of-life, there is a need for EMA to manage the energy transition, while maintaining energy reliability and affordability.

The amendments introduced by the Bill seek to:

  • safeguard energy security (in particular, the reliability, availability and continuity of the supply of electricity) by enabling EMA to construct, acquire and manage electricity infrastructure required for the import, export or generation of electricity;
  • enable EMA to implement policies to reduce the emission of greenhouse gases in the import, export, generation, transmission or supply of electricity;
  • enhance protection of critical electricity and gas infrastructure; and
  • make various technical amendments to the Acts.

Key amendments

Enhance energy and carbon efficiency of electricity generation and transmission

The Bill will empower EMA to implement policies, measures, standards or other requirements (including through regulation and codes of practice) to reduce greenhouse gas emissions in the import, export, generation, transmission or supply of electricity.

A proposed amendment to the Electricity Act will enable EMA to promote the use of energy and carbon-efficient technologies through the setting of greenhouse gas emissions standards to encourage power generation companies to improve the energy efficiency of their existing units, and shift towards cleaner and more efficient modes of power generation. This complements EMA’s existing incentive schemes such as the Energy Efficiency Grant for Power Generation Companies.

Safeguard energy security and reliability

The Bill proposes the following to safeguard energy security and reliability:

  • Enable EMA to acquire, build, own and/or operate critical infrastructure: To ensure sufficient and reliable electricity supply during the energy transition, proposed amendments to the EMA Act and Electricity Act will empower EMA to construct, acquire (including by purchase or lease), develop, manage (including by leasing out for use) or operate generating units (including energy storage systems), generating stations or infrastructure for the import or export of electricity. This will enable EMA to address any failures by the private market to do so, given that investors’ appetite to build new generation capacity has dampened due to the Covid-19 pandemic and transition to cleaner energy sources.
  • Enable EMA to raise capital or issue bonds for infrastructure: It is proposed to amend the EMA Act to empower EMA to raise loans (including by the creation of debentures or bonds), either from the Government or, with the Minister’s approval, from any other source in or outside Singapore. This will enable EMA to raise capital to finance the construction of critical infrastructure.

Other amendments

The Bill also proposes to make the following amendments:

  • Enhance the protection of critical electricity and gas infrastructure: Proposed amendments to the Electricity Act and Gas Act will enhance the protection of critical electricity and gas transmission infrastructure by expanding the scope of the existing protective statutory provisions to infrastructure (including cable pipe-blocks and tunnels, valve chambers, pipe jacking sleeves, concrete casings and rock armour) housing or intended to house any transmission electricity cables, gas transmission pipeline or submarine gas pipeline. This will enhance current regulatory powers which only penalise offenders who damage the actual cables/pipelines.
  • Clarify the ability to draw down on electricity retailers’ deposits to offset outstanding settlement payments to protect consumers’ interests: Electricity retailers are required to place deposits with the Energy Market Company, SP Services Ltd, and SP Power Assets Ltd (collectively, “appointed licensees”) to offset outstanding settlement payments for purchases from the wholesale electricity market, market support services, and grid charges. These protect consumer interests by reducing the amount of default costs borne by consumers in insolvency situations. A proposed amendment to the Electricity Act clarifies that EMA and its appointed licensees can draw down on deposits placed with them, notwithstanding the provisions of the Insolvency, Restructuring and Dissolution Act 2018.
  • Removal of eligibility criteria to be a contestable consumer: It is proposed to amend the Electricity Act to remove the requirement for a consumer to fulfil eligibility criteria in order to purchase electricity from a retail electricity licensee, or directly or indirectly from any wholesale electricity market.
  • Streamline the granting and extension of electricity and gas licences: The Bill contains an amendment to remove the existing requirement for the approval of the Minister for Trade and Industry for the grant or extension of licences.
  • Clarification of inspection, maintenance, repair and renewal obligations under the Gas Act: The Gas Act will be revised to require the gas transporter to establish and implement a programme for regular and periodic inspections of gas installations and gas service pipes linking gas service isolation valves to gas installation, whether by the gas transporter or a prescribed person under the Gas Act. Any such prescribed person who fails to carry out any necessary inspection, maintenance, repair or renewal, will be guilty of an offence.
  • Update the definition of “market support services”: The definition of “market support services” under the Electricity Act will be amended to include, as a market support service, safety inspections of electricity installations.

Reference materials

The following materials are available from the MTI website www.mti.gov.sg: