Speech by Minister, Prime Minister’s Office and Second Minister for Home Affairs and Trade & Industry S Iswaran at Energy Market Authority’s (EMA) 10th Anniversary Dinner
Staff of the Energy Market Authority (EMA),
Ladies and Gentlemen
Good evening. I am pleased to join you this evening to celebrate the Energy Market Authority’s (EMA) 10th Anniversary.
2. EMA’s first decade has been eventful, to say the least. Global energy markets have evolved significantly, in tandem with the ebb and flow of the global economy. In the first half of the decade, there was strong economic growth, causing a significant rise in energy prices. In more recent years, the global economic downturn and tighter energy markets have resulted in greater volatility in oil and gas prices. The quest for alternative energy options has also gained renewed impetus, in part due to concerns over carbon emissions and the impact on the environment. More recently, shale gas has emerged as a potential game changer that could significantly reshape the markets in North America and the world.
3. Against a backdrop of such ferment in the energy landscape, EMA performs a critical role in fulfilling its mission of promoting effective energy market competition, while ensuring reliable and secure energy supply for Singapore.
EMA’s Achievements: Market Liberalisation
4. EMA has been pivotal in the development of a more open and competitive energy sector in Singapore. One key milestone was the liberalisation of Singapore’s energy market. In 2003, the National Electricity Market of Singapore was established to promote the efficient supply of wholesale electricity. The gas market was subsequently restructured in 2008 to introduce competition in the gas import and retail businesses. Besides fostering healthy competition, EMA has also put in place a transparent and equitable licensing framework, market rules and codes of practice, which have resulted in greater efficiencies and encouraged new investments in the sector. These efforts have yielded benefits for both consumers and market participants alike.
Uncertainty of the economic and energy landscapes
5. Tonight, even as we recognise these past achievements of EMA, we are also reminded of the persistent flux in the global energy backdrop, and the challenges it continues to pose. In the past year alone, the problems in Europe and the US have further exacerbated the uncertainty in global energy markets, which were already affected by political upheaval in the Middle East/North Africa and the incident at the Fukushima Nuclear Power Plant. We also have to be mindful of our carbon footprint in a world which is likely to become more carbon constrained over time. To meet these challenges and forge a progressive energy landscape for sustained growth, EMA must persist and persevere in its three-pronged strategy - to promote a competitive energy market; to enhance energy security; and to develop a dynamic energy sector.
Promoting a competitive energy market
6. The first plank in EMA’s strategy must be to continue to enhance market competition as this will yield sustained benefits to consumers and market participants. Today, there are five power generation companies in Singapore selling electricity to some 10,000 large contestable commercial and industrial consumers. In 2013, we will see the entry of a 6th generation company in Singapore when GMR Energy commences the operations of its 800 MW combined cycle plant. And, EMA will facilitate the entry of more new power generation companies, and the introduction of new plants, to further enhance the competitiveness of the energy industry. In addition, EMA will continue to review market rules and regulations to ensure the efficient functioning of the energy market.
Enhancing Energy Security
7. Enhancing Singapore’s energy security constitutes the second key thrust of EMA’s efforts. Singapore faces significant energy constraints with a near complete reliance on imports to fuel our energy supply.
8. Hence, diversification of fuel sources will underpin our energy security - by protecting us against supply disruptions, and spurring greater competition in our energy market. These were the considerations behind the Government’s decision in 2009 to develop the Liquefied Natural Gas (LNG) terminal in order to broaden our access to fuel sources from around the world. The terminal is on track to commence operations by the second quarter of 2013.
9. Demand for LNG has proven to be stronger than expected. Power generation companies and other industrial gas users have already committed to around 2.65 Mtpa, accounting for about 88 per cent of BG’s franchise. BG anticipates that it may reach 3 Mtpa by next year. With LNG set to play a larger and growing role in our energy mix, we must put in place robust LNG procurement strategies to support our long term economic growth. Therefore, EMA has begun to study the options for LNG procurement beyond the expiry of BG’s franchise. EMA has appointed a consultant for this purpose and will launch an industry consultation in the first quarter of 2012. The aim is to establish an import framework that will allow us access to competitively-priced LNG from diversified sources.
Developing a Dynamic Energy Sector
10. Finally, the evolving energy landscape has called for a natural expansion of EMA’s role from that of a regulator to that of an industry developer. In this regard, EMA will continue to advance Singapore’s standing as a “living lab” by forging a progressive energy landscape that is resilient, sustainable and innovative in our energy use.
11. In support of this goal, EMA has embarked on several pilot projects to promote opportunities for public-private collaborations. For example, it is leading the Intelligent Energy System (IES) project, which will pilot smart grid solutions for the grid operator, energy businesses and electricity consumers. Through this project, industry and households will be offered various solutions to improve their energy efficiency and optimise their energy consumption. The smart grid project will also enable EMA to explore ways to enhance Singapore’s power system capabilities.
12. EMA will also have to play a more active role in exploring alternative energy options for Singapore. With tighter energy markets and growing carbon constraints, the need for alternative and clean energy sources, to complement traditional fossil fuels, has intensified. EMA must evolve policies and initiate programmes that will encourage the development of this sector in an economically viable manner.
Capacity Building for the Energy Sector
13. Undergirding these strategic thrusts is the need for talent in this sector – in government and in the private sector. EMA must continue to build its capacity to be able to respond quickly and innovatively to the ever-evolving global energy landscape. To this end, EMA must enhance its organisational capabilities and strengthen its partnerships with the industry.
14. The energy industry must also do its part - to help develop a skilled and committed workforce that will position Singapore well to meet the challenges, and seize the opportunities, that lie ahead. Recently, EMA and the Singapore Workforce Development Agency (WDA) conducted a study on our energy manpower needs. The preliminary findings show that the power utilities sector needs to recruit about 2,400 engineers and technicians over the next decade, due to the new generation plantings and the LNG terminal. In addition, the sector will require more new entrants to replace those who will retire in the next 10 to 15 years.
15. The energy sector must continue to invest in education and training for the existing workforce to enhance productivity and improve industry competitiveness. There is also a need to provide more information and raise the awareness among younger Singaporeans of career opportunities in the energy sector.
16. In conclusion, over the past 10 years, EMA has proven itself to be nimble and innovative in its regulatory response to market developments; and adept in forging a constructive partnership with industry while nurturing a vibrant energy sector. As we look to the complex challenges that lie ahead, EMA must build on this foundation to secure a brighter energy future for Singapore.
17. I congratulate EMA on its 10th anniversary, and commend you on an eventful decade with significant milestones. I wish you all a pleasant evening.
18. Thank you.
Source: Energy Market Authority