Singapore Proposes Amendments to Energy Market Rules

This week the Energy Market Authority (EMA), Singapore’s energy market regulator (amongst other things), announced (click here) that the Ministry of Trade and Industry (MTI) had introduced the Energy Transition Measures and Other Amendments Bill (click here) for a first reading in the Singapore Parliament. The new legislation aims to amend the Energy Market Authority of Singapore Act (“EMA Act”), the Electricity Act and the Gas Act to provide additional powers to strengthen the EMA’s ability to regulate the power sector, introduce “guardrails” for the Singapore electricity market and to establish a fund to help develop the city state’s low carbon energy sources. The proposed legislation was drafted following a May 2024 consultation (click here).

The six key proposals of the amending legislation are summarised as follows:

Proposal 1: Set up the Future Energy Fund:

• The Singapore government will set up a Future Energy Fund (FEF) with an initial injection of SGD $5 billion;
• The FEF will support investments for Singapore’s energy transition;
• The proposed amendments to the EMA Act will establish the FEF under the EMA with oversight from the Singapore government.

Proposal 2: Establish regulatory regime for centralised gas procurement:

• MTI and EMA intend to establish a Central Gas Entity (CGE) to aggregate the demand for gas from power generation companies and centralise gas procurement for the power sector;
• The Electricity Act and the Gas Act will be amended to empower the EMA to regulate the CGE and introduce the requirement for power generation companies to procure gas solely from the CGE.

Proposal 3: Allow EMA to recover costs for energy security, market development and decarbonisation related initiatives:

• Regarding the energy transition, the EMA would implement new initiatives to:

1. Strengthen energy security;
2. Develop a competitive market; and/or
3. Support the decarbonisation of the power sector.

• Amendments to the Electricity Act and the Gas Act would allow the EMA to recover costs of providing these initiatives from those who benefit from them;
• The EMA’s recovery powers will only be invoked when necessary and with due care (including a preceding consultation) to ensure transparency and to control energy costs.

Proposal 4: Facilitate shared access to critical energy infrastructure:

• Due to Singapore’s small size, electricity or gas licensees may need to access critical infrastructure owned by other persons to carry out their functions (“Critical energy infrastructure” refers to installations that are required by licensees to provide electricity and gas supplies);
• Amendments to the Electricity Act and the Gas Act will allow EMA to direct owners of critical energy infrastructure to enter an agreement with licensees to allow them to gain access to critical energy infrastructure;
• EMA will only issue such directions if access is necessary and in the public interest to ensure energy security and reliability.

Proposal 5: Require owners of key electricity and gas assets to seek approval when repurposing assets:

• With limited availability of land earmarked for public utilities, owners of existing energy infrastructure may wish to repurpose it for other uses potentially impacting system reliability;
• Amendments to the Electricity and the Gas Act would require owners of key electricity and gas assets to seek the EMA’s approval before repurposing such assets;
• When assessing requests, the EMA will consider owners’ needs and circumstances, while ensuring that overall energy security and system reliability is not compromised.

Proposal 6: Empower EMA to implement power rationing during emergencies:

• The 2021/2022 global energy crisis highlighted the risks of prolonged supply disruptions spurring Singapore to prepare for future emergencies;
• Amendments to the Electricity Act will equip the EMA with powers to direct licensees and consumers to ration power to maintain grid stability during emergencies;
• As with similar regimes in France and Germany, the EMA will implement power rationing as a last resort and use such measures expeditiously.