Energy

SG Open Electricity Market: What does it mean for Sustainability?

Most Singaporeans will relate the open electricity market to increased consumer options, but few will know that it is also an opportunity to affect the growth of renewables in Singapore.

Under the new liberalisation initiative, SP Group will continue to operate the national power grid and provide meter readings but consumers can choose to purchase from a number of retailers, with reported savings of 20%. By being responsive to market conditions such as the supply and demand of electricity in the wholesale energy market, retailers can translate price savings to consumers.  

On the sustainability front, retailers offer green options as a way to differentiate themselves. Energy retailers can drive sustainability in three ways: they can directly build solar energy, direct funds towards renewable energy options, or increase the efficiency of the energy grid.

Some examples include ‘carbon neutral’ electricity by ES Power, and an option by Sunseap which guarantees 100% solar energy.

Fixed_Tilt_Solar_panel_at_Canterbury_Municipal_Building_Canterbury_New_Hampshire.jpg

In Singapore, most consumers stay in public housing apartments (HDB flats), which prevents them from directly building solar panels on their rooftops. Hence, the off-site generation options is more viable, where solar panels are built elsewhere and each watt generated is traceable and verified by an independent party like TIGRs. This verification process allows retailers to offer Renewable Energy Certificates (REC) to consumers, which provides a third-party assurance that the renewable energy has indeed been generated.

While there are multiple electricity generating companies, Singapore has only one grid. Hence, the actual electricity usage by a consumer who purchases 100% solar energy is a mixture of renewable and non-renewables (since it is all ‘mixed’ in the grid). However, the consumer has helped to make the national grid ‘greener’, by increasing the solar power generated for the national grid.

In addition to directly building solar, companies like ES power, iSwitch and Ohm also offer a “carbon neutral” option. This is achieved through purchasing the corresponding carbon offset credits for carbon emissions related to a household’s consumption. These funds are directed towards projects which reduce carbon emission, but may not be renewable energy projects. Nevertheless, they offer a sustainable alternative to conventional electricity purchases.

Perhaps the lingering question is this: “does my purchase make a difference, even if I purchase only 1% solar energy?” This concern is certainly understandable, given that industry electricity consumption dwarfs domestic use.

Individual purchases do make a difference, though to a limited extent. Renewable energy currently makes up less than 1% of Singapore total electricity generation. Given where the renewable energy sector in Singapore is at, there is a limit to the maximum amount of solar energy that can be generated and used in the Singapore grid. Experts put this at 10%, but expect this to increase as renewable energy costs are driven down, and investments in battery technology become more promising. Hence, individual consumption can help drive us from 1% towards 10%, but it will be a long time yet before renewable energy makes up a large part of our energy grid.

Glossary:

Generation - Generation is electricity production by large-scale (>1MW) energy producers. Historically hydrocarbon or nuclear, recently solar and wind.

Transmission - Transmission is the business of moving electricity over long distances, usually from generators (power plants) to distributors (consumer networks).

Distribution - Distribution is the movement of electricity from the transmission (high voltage) network to the consumer. Distributors operate lower-voltage electrical lines that connect to individual consumer households or businesses.

Retail - Retail is the sale of electricity to consumers. Retailers are responsible for administering and billing consumers. In Singapore, Singapore Power is the sole entity in charge of all transmission and distribution services. It is also a retailer. At the time of writing, the Open Electricity Market is being rolled out. This will allow consumers to buy electricity from other retailers than Singapore Power, which means they can choose plans with different mixes of power from the generators.

This article is based on a panel discussion organized by Climate Conversations on 24th January 2019, titled: Open Electricity Market: Your Green Options