SINGAPORE: It is “not tenable” for the Government to subsidise electrical energy consumption in Singapore, Second Minister for Trade and Industry Tan See Leng informed Parliament on Monday (Apr 4), including that this retains home electrical energy costs decrease than the worldwide power costs Singapore should pay for within the first place.

“The Government can and will help to smooth out extreme fluctuations in energy prices, but over the longer term, electricity prices have to reflect the costs of procurement and production,” he mentioned in a ministerial assertion on inflation and enterprise prices.

This comes as the value of oil and gasoline stays elevated as a result of components like elevated consumption, upstream manufacturing points and the conflict in Ukraine, he mentioned, warning that buyers ought to be mentally ready to face greater electrical energy payments over time.

SP Group introduced final week that it might increase regulated tariff charges for its customers by about 10 per cent, whereas these on retail contracts have already began to see greater electrical energy costs when renewing their contracts.

Nevertheless, Dr Tan mentioned the protracted power crunch has highlighted the necessity to make Singapore’s energy system extra resilient and fewer inclined to gas provide shocks, by diversifying the nation’s gas and power sources.

“These measures will take time to bear fruit, but we will have a more secure and a more resilient power system over time,” Dr Tan mentioned.

“Each of us, as fellow Singaporeans, I hope we can also do our part. I urge all of us to conserve energy, just like how we conserve water.”

This contains small life-style changes akin to switching off home equipment that aren’t in use, elevating the air-conditioning temperatures by 1 to 2 levels Celsius, and utilizing the fan as an alternative of air-conditioning the place doable.

These “can go a long way in maintaining a sustainable, secure and resilient energy future for all of us”, Dr Tan mentioned.

WHY ENERGY PRICES ARE RISING

Singapore generates round 95 per cent of its electrical energy domestically from imported pure gasoline, with electrical energy technology corporations (gencos) usually counting on long-term piped pure gasoline (PNG) and liquefied pure gasoline (LNG) contracts to satisfy their wants.

“They use spot LNG on an opportunistic basis to supplement their long-term contracts,” Dr Tan defined. “Now by and large, this has allowed us to keep electricity prices relatively stable and mitigate the impact of global price shocks.”

Still, Singapore can not absolutely insulate itself from volatilities within the world power market, he mentioned, pointing to a “confluence of factors” that triggered the costs of oil and pure gasoline to spike, spilling over into Singapore’s home power market.

As main economies around the globe emerged from the pandemic, they elevated oil and gasoline consumption. This, coupled with seasonally-high power consumption throughout the winter months within the northern hemisphere, and a collection of sudden gasoline manufacturing outages, led to a supply-demand mismatch in world power markets.

Closer to house, upstream manufacturing points in Indonesia’s West Natuna gasoline area and gasoline strain points from South Sumatra within the fourth quarter of 2021 triggered disruptions to Singapore’s PNG provides. As a end result, some gencos needed to buy extra spot LNG at elevated world gasoline costs to make up for the drop in PNG provides.

“Although some of the demand pressures have abated as winter in the northern hemisphere comes to an end, and upstream gas production issues in the Indonesian gas fields have been resolved, the gas supply situation continues to remain tight, and this is exacerbated and made protracted by the conflict in Ukraine,” Dr Tan mentioned.

MEASURES IN PLACE

The Ministry of Trade and Industry and the Energy Market Authority (EMA) have put in place measures to safe Singapore’s electrical energy provide and preserve the orderly functioning of the broader power sector, Dr Tan mentioned.

Since October final yr, authorities have established a Standby LNG facility, which gencos can draw from to generate electrical energy within the occasion of disruptions to their pure gasoline provides.

“These measures bolster gencos’ existing stockpile and they provide additional layers of fuel security to cope with the short-term shocks to global gas supply,” Dr Tan mentioned.

Since January 2022, EMA has additionally been working with electrical energy retailers and technology corporations to assist giant customers safe retail contracts.

For instance, companies can safe one-month mounted worth plans and retail contracts with vital mounted worth parts by the Temporary Electricity Contracting Support Scheme (TRECS).

So far, there was enough provide below TRECS to satisfy demand, Dr Tan mentioned.

“Given the uncertain global energy situation, EMA will be extending all measures, including TRECS, to end-June 2022,” he added.

“This will give businesses, especially SMEs (small- and medium-sized enterprises), a bit more time to respond to the evolving global energy situation.”

Dr Tan mentioned EMA will proceed to watch the state of affairs and take into account extending the measures additional or introduce new ones, if vital.

'Not tenable' for Government to subsidise electricity consumption: Tan See Leng

Aqil Haziq Mahmud

Source : channelnewsasia.com

The post ‘Not tenable’ for Government to subsidise electricity consumption: Tan See Leng first appeared on Umorr.

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