SIEW Summit: 3 Key Announcements by Minister Gan Kim Yong

Balancing energy security and meeting Paris Agreement goals have become imperative for all countries amid unprecedented volatility of gas prices, underinvestment in energy projects and geopolitical instability. To ensure Singapore is able to navigate the dual challenges of the energy transition and energy crisis, Minister for Trade and Industry Gan Kim Yong outlined key measures for strengthening Singapore’s market structure.

In the SIEW Summit Opening Address today, Minister Gan shared that Singapore would put in "guardrails" focusing on three key areas – power generation capacity, gas supply and retail markets. This is to ensure that the energy sector continues to function well even under volatile conditions. Here are the key announcements made:

1. Power generation capacity: A centralised approach to ensure capacity building at the national level

   To plan for sufficient power generation capacity building at the national level, Singapore will introduce a centralised approach to facilitate private investments in new generation. This will be through a competitive tender as and when needed for generation capacity that will be required within the next five years. Should there be inadequate interest to plan new capacity, EMA will step in to build the required new capacity.

   Moving forward, power generation companies will not be able to plant new capacity as they wish. This is to provide greater certainty to investors and to avoid risks of overcapacity, thus ensuring adequate capacity to meet Singapore’s future energy needs.

2. Gas supply: Gas reserves to be mandated

   Singapore will permanently institutionalise the temporary crisis management measures enacted by the Energy Market Authority of Singapore (EMA) in late 2021, when the global energy market tightened. This will include mandating power generation companies to maintain sufficient fuel for power generation and to establish a standby fuel facility. These are to guard against the risks of gas supply disruptions amid a "perfect storm" of unprecedented market volatility and soaring gas prices.

   In addition, EMA will work with industry to explore ways to aggregate gas procurement and obtain longer-term, more secure contracts.

3. Retail markets: Stricter rules for electricity retailers

   To strengthen consumer protection, EMA will tighten regulatory requirements on electricity retailers. This ensures that only credible industry participants with adequate financial strength and sustainable business propositions will be allowed to retail electricity.

   On the consumer side, EMA will stiffen the eligibility criteria for Wholesale Electricity Price (WEP) plans. This is to ensure that only consumers able to deal with the risks of price volatilities will be allowed to buy at the WEP.

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