Transition to cleaner energy will involve 'trade-offs', EMA to reduce cost impact where feasible: CEO

  • Aug 16, 2021
  • EIN

SINGAPORE: Trade-offs are inevitable as Singapore transitions to cleaner energy, but the Energy Market Authority (EMA) will seek to manage this and minimise the impact of costs where feasible, its CEO Ngiam Shih Chun told CNA.

Mr Ngiam noted that the "four switches of supply" – natural gas, solar, regional power grids and emerging low-carbon alternatives – will aid Singapore with such a transition. However, he pointed out this could result in higher energy costs.

"While the four switches will help us transition to cleaner energy, this transition will inevitably involve trade-offs. For example, as we tap onto regional power grids and other low-carbon technologies, energy costs may increase," he said in an email interview.

Mr Ngiam noted that low electricity prices are not "commercially viable" for power generation companies in the long run.

"While consumers have benefitted from lower electricity prices in recent years due to overcapacity, depressed wholesale electricity prices are likely to rise and normalise when power plants retire over the next few years, coupled with rising electricity demand," he explained.

"Consumers would have preferred low electricity prices, but it is not commercially viable for power generation companies in the long run. It will also discourage investments in new generation capacity to renew our power infrastructure. Overall, EMA will seek to manage the transition well and minimise cost impact where feasible."

Because Singapore relies on imports for its energy needs, it is subject to global price movements, noted Mr Ngiam. "Hence, we price our electricity to reflect its full costs to encourage prudent use among consumers," he said.

Mr Ngiam pointed out that Singapore has "constantly transformed" the energy sector to ensure energy security, affordability and environmental sustainability.

"One of the key challenges that EMA had was energy security. In the early 2000s, Singapore relied solely on three pipelines from Malaysia and Indonesia for all our natural gas. Any issues with the pipeline infrastructure could have disrupted our gas and power supply," he explained.

"Thus, we made a strategic decision in 2006 to build a liquefied natural gas (LNG) terminal, which has sufficient capacity to supply all of Singapore’s natural gas demand, if needed. This key infrastructure has allowed us to import natural gas from around the world and strengthen our energy security through diversification."