Asked by Anonymous
Asked on 10 Jul 2019
How does the electricity market work in Singapore?
The Energy Market Authority said earlier this year that consumers who have switched out of buying electricity from SP Power to one of the 12 electricity retailers pay a rate that is about 20 to 30 percent lower than the regulated tariff. How is it that these retailers can offer rates that are lower than SP power?
Singapore has a small electricity market with just a few power generating companies (Gencos)
There are 4 parties: EMA (Regulator), Singapore Power (Infrastructure), Generation companies (Genco) and NEW Electricity Retailers (may or may not be a Genco)
Previously it was only EMA and SP running the whole show
To create an efficient and competitive market, SP signed an agreement with 6 Gencos which are called Vesting contracts
It is for SP to buy electricity from the 6 Gencos at a fixed price called the vesting contract prices
And this is worked out quarterly via a formula approved by the Energy Market Authority (EMA)
SP will plan to relinquish all it’s role to privatise entirely for more efficient market to work and become only the infrastructure provider
However there will always be a need for SP to be around to support the people and run the infrastructure
Answering this as part of the Money FM 89.3 show we just did :)
From the website of www.emcsg.com, it looks like electricity pricing is priced on half hourly in the wholesale market in Singapore.
All generation in SIngapore has to be plugged to the National grid where SP Power assets continue and operate the grid. The electricity supply is the same as before and will be reliable as compared to other regions of the world.
Electricity retailers then have to buy electricity from the wholesale market (which the price depend on market forces)
In general, your electricity supply remains the same and the prices would be just a financial contract between residential households and the retailer.