Electricity regulation in Singapore: overview
by Kelvin Wong, Tan Wee Meng and Yeo Boon Kiat, Allen & Gledhill LLP
 
Country Q&A | Law stated as at 01-Aug-2019 | Singapore
 
A Q&A guide to electricity regulation in Singapore.
 
The Q&A gives a high level overview of the domestic electricity market, including domestic electricity companies, electricity generation and renewable energy, transmission, distribution, supply and tax issues. It covers the regulatory structure; foreign ownership; import of electricity; authorisation and operating requirements; trading between generators and suppliers; rates and conditions of sale and proposals for reform.
 
To compare answers across multiple jurisdictions, visit the energy and natural resources Electricity regulation Country Q&A tool.
 
This Q&A is part of the global guide to energy and natural resources. For a full list of content visit www.practicallaw.com/energy-guide.

Overview

Electricity market

1. What is the role of the electricity market in your jurisdiction?

 
Overview
 
The electricity industry in Singapore can be divided into the following principal businesses:
 
•	Generation: the production of electricity at electricity generation plants using fossil fuels and other sources of energy.
Transmission: the transfer of electricity from generation plants either to a distribution network or directly to large industrial electricity consumers using a network of high-voltage power cables.
Distribution: the delivery of electricity to homes and businesses using a network of high-voltage and low-voltage power cables.
Retailing: the purchase of electricity by, and its sale to, individual electricity consumers.
The provision of various services and activities relating to the electricity industry, including market support services, and the operation of and trading in the wholesale electricity market.
 
Recent trends
 
See Question 8 and Question 29.
 
Regulatory structure

2. What is the regulatory framework for the electricity sector?

 
Regulatory framework
 
The main legislation governing the electricity sector in Singapore is the Electricity Act (Cap. 89A) which aims to:
 
•	Create a competitive market framework for the electricity industry.
Provide safety, technical and economic regulation of the generation, transmission, supply and use of electricity.
Unless an exemption applies, an electricity licence granted is required for, among others (Section 9, the Electricity Act):
 
•	Generation.
Transmission.
Retail.
Import or export.
The trade or operation of the wholesale electricity market.
Electricity licences may be granted subject to any conditions imposed by the Energy Market Authority of Singapore (EMA), and may include any restriction or condition required by the EMA or specified under the Electricity Act. The Energy Market Authority of Singapore Act (Cap. 92B) establishes the EMA, the independent regulator overseeing the gas and electricity industries.
 
Market participants must comply with the market rules made under Section 46 of the Electricity Act (which are contractually binding on market participants) and codes of practice issued or approved under Section 16 of the Electricity Act.
 
Regulatory authorities
 
The EMA’s functions and duties include:
 
•	Protecting the interests of consumers in respect of the quality of electricity supply services provided.
Securing that all reasonable demands for the supply of electricity are satisfied.
The National Environment Agency was established under the National Environment Agency Act 2002 (Cap. 195). Its functions and duties include:
 
•	Promoting energy efficiency.
Using clean energy, clean technologies and efficient pollution control technologies.
Waste recycling.
  
Electricity companies

Main companies

3. What are the main companies involved in electricity generation, transmission, distribution and supply?

 
Generation
 
According to the website of the Energy Market Authority of Singapore (EMA), the following 15 entities have been granted licences to generate electricity in Singapore:
 
•	YTL PowerSeraya Pte. Limited.
SembCorp Cogen Pte Ltd.
PacificLight Power Pte. Ltd.
Keppel Merlimau Cogen Pte Ltd.
Tuas Power Generation Pte. Ltd.
Shell Eastern Petroleum (Pte) Ltd.
Senoko Waste-To-Energy Pte. Ltd.
Senoko Energy Pte. Ltd.
ExxonMobil Asia Pacific Pte. Ltd.
Keppel Seghers Tuas Waste-to-Energy Plant Pte. Ltd.
Tuaspring Pte. Ltd.
TP Utilities Pte. Ltd.
Singapore Refining Company Private Limited.
TuasOne Pte. Ltd.
National Environment Agency.
Of these, six (Senoko Energy Pte. Ltd., YTL PowerSeraya Pte. Limited, Tuas Power Generation Pte. Ltd., SembCorp Cogen Pte Ltd, Keppel Merlimau Cogen Pte Ltd and PacificLight Power Pte. Ltd.) accounted for just over 90% of the total licensed generation capacity in Singapore as at the first quarter of 2018.
 
Transmission and distribution
 
There is one transmission licensee, SP PowerAssets Limited (SPPA), which currently owns and maintains the transmission system in Singapore.
 
The transmission system comprises a high voltage network (the transmission network) and a low voltage network (the distribution network).
 
SPPA has appointed SP PowerGrid Limited as its agent to manage its business including the management and operation of the transmission network and distribution network.
 
Supply
 
There are two categories of consumers under the Electricity Act (Cap. 89A) classed according to their annual electricity usage:
 
•	Contestable.
Non-contestable.
Contestable consumers can buy electricity from a retail electricity licensee at a chosen price plan, directly from the wholesale market at half-hourly wholesale electricity prices or indirectly from the wholesale market through the market support service licensee (MSSL) at the regulated tariff.
 
Non-contestable consumers must procure their supply of electricity from the MSSL at the regulated tariff. SP Services Limited is currently licensed under Section 9 of the Electricity Act as the sole MSSL and is responsible for supplying electricity to non-contestable consumers.
 
Contestable consumers accounted for 76.3 per cent. of Singapore’s total consumption of electricity in 2017 with non-contestable consumers account for the rest of total consumption.
 
Under the Open Electricity Market regime, residential and business consumers which would otherwise be classified as non-contestable consumers may choose to buy electricity from a retail electricity licensee at a chosen price plan, instead of from the MSSL at the regulated tariff. The nationwide rollout of the Open Electricity Market regime was completed on 1 May 2019.
 
Retail electricity licensees may purchase electricity from the wholesale market and sell electricity to contestable consumers. Based on information from the EMA, there are currently 29 electricity retail licensees, 13 of which are currently participating in the Open Electricity Market.
 
The main retail electricity licensees (other than SP Services Limited) are:
 
•	Seraya Energy Pte Ltd.
Senoko Energy Supply Pte Ltd.
Tuas Power Supply Pte Ltd.
SembCorp Power Pte Ltd.
Keppel Electric Pte Ltd.
 
Unbundling requirements
 
The Electricity Act stipulates that:
 
•	No transmission licensee, transmission agent licensee or market support services licensee can be granted an electricity licence to carry out any activity other than the:
transmission of electricity;
transmitting of electricity for or on behalf of a transmission licensee; and
provision of market support services, respectively.
No electricity licensee which is authorised by its licence to operate any wholesale electricity market can be granted an electricity licence to carry out any activity other than the operation of that market.
 
Foreign ownership

4. Are there any restrictions concerning the foreign ownership of electricity companies or assets?

 
There are no specific restrictions on foreign ownership of electricity companies or assets. There are, however, restrictions on shareholding which apply generally to any ownership of designated electricity licensees, designated entities and designated business trusts.
 
Designated electricity licensees, designated entities and the trustee-manager of a designated business trust must give notice to the Energy Market Authority (EMA) if any entity acquires an equity interest in the licensee, entity or business trust that would result in them holding between 5% but less than 12% of the total equity interest in that licensee, entity or business trust.
 
Prior approval by the EMA is required for anyone who (whether alone or together with associates) seeks to:
 
•	Be an indirect controller of a designated licensee, designated entity or designated business trust.
Hold 12% or more or 30% or more of the total equity interest in a designated licensee, designated entity or designated business trust.
Control 12% or more or 30% or more of the voting power in a designated licensee, designated entity or designated business trust.
Acquire as a going concern the business of a designated licensee conducted under its licence or the business which relates to a designated entity’s transmission system or any part thereof.
 
Insolvency

5. Are there any special insolvency regimes that apply to companies operating in this sector?

 
The Electricity Act (Cap. 89A) provides for certain provisions in connection with an electricity licensee’s insolvency. This includes the following (section 29, Electricity Act):
 
•	If, on an application made to the Minister by the Energy Market Authority of Singapore (EMA), the Minister is satisfied that an electricity licensee is (or is likely to be) unable to pay its debts, the Minister may, among other things, make a special administration order in relation to that electricity licensee.
An electricity licensee must not be wound up voluntarily without the consent of the EMA.
No judicial management order under the Companies Act (Cap. 50) can be made in relation to an electricity licensee without the consent of the EMA.
The EMA must be notified by any person seeking to take any step to enforce any security over an electricity licensee’s property or enforce a judgment obtained against an electricity licensee.
The EMA will be a party to any proceedings under the Companies Act relating to the winding up of the affairs of an electricity licensee.
Apart from the foregoing, the insolvency regime prescribed under the Companies Act to companies incorporated under the Companies Act will apply.
 
Import of electricity

6. To what extent is electricity imported and/or exported?

 
Singapore does not currently import electricity. The Energy Market Authority (EMA) published a consultation paper in December 2011 to explore the feasibility of importing electricity (although no consequent determination paper was published). In 2012, the EMA stated that it was actively looking at the possibility of importing electricity and would consider importing it if there were advantages to Singapore consumers.
 
Singapore also does not normally export electricity. However, Singapore can export electricity to Johor Bahru, Malaysia, if there is a need.
  
Electricity generation and renewable energy

Sources of electricity generation

7. What are the main sources of electricity generation?

 
Fossil fuels
 
Singapore uses primarily natural gas for the generation of electricity. As of the first quarter of 2018, natural gas accounted for approximately 95% of electricity generation, petroleum products accounted for approximately 0.7%, coal accounted for approximately 1.3% and other sources (including municipal waste, biomass and output from solar) accounted for approximately 2.9%.
 
Nuclear fission
 
Nuclear fission is not a source of electricity generation in Singapore.
 
Renewable energy
 
The Energy Market Authority (EMA) and the National Climate Change Secretariat (NCCS) have observed that there are limited renewable energy options in Singapore (with the exception of solar energy). Singapore has no potential for harnessing hydro-electric or geothermal power and has low wind speeds and a low mean tidal range.
 
The EMA has stated that, solar energy offers the greatest deployment potential in Singapore, due to Singapore’s geographical location. The NCCS has also stated that Singapore has a high average annual solar irradiation of about 1500 kWh per square metre.

8. Are there any government policies, targets or incentives in place to encourage the use of renewable or low carbon energy?

 
Government policies/incentives
 
Renewable Energy Integration Demonstrator - Singapore. In 2014, the Economic Development Board of Singapore (EDB) announced the Renewable Energy Integration Demonstrator – Singapore (REIDS) initiative, Southeast Asia’s first major renewable energy integration demonstration microgrid testbed. The REIDS initiative was launched by Nanyang Technological University (NTU) and supported by the EDB and the National Environment Agency. The testbed is the largest system of interconnected micro-grids in Southeast Asia.
 
According to the EDB, REIDS will provide a platform for researchers and industry to develop, test and demonstrate the integration of solar, wind, tidal-current, diesel, storage and power-to-gas technologies on Semakau Landfill, Singapore’s only landfill, located on an offshore island. Companies will be able to develop control systems to integrate and manage multiple microgrids with varying loads and renewable energy sources.
 
To date, as part of the REIDS initiative, NTU has set up partnerships with 30 local and international companies. Four out of eight micro-grids are currently up and running.
 
SolarNova. In an effort to increase solar deployment in Singapore and fulfil the government’s plans to raise the adoption of solar power, the EDB and the Housing Development Board (HDB) launched SolarNova in 2014, a government-led programme that aims to accelerate solar deployment in Singapore through promoting and aggregating solar demand across government agencies. According to the EDB:
 
•	SolarNova will use a solar leasing business model where a private sector company will install, own and operate the solar systems and sell electricity to government agencies through a long-term power purchase agreement.
Under SolarNova, the Housing and Development Board of Singapore (the public housing agency in Singapore which manages housing for more than 80% of the population) will serve as the government’s central procurement agency and conducts solar tenders on behalf of all other government agencies assisted by the Solar Energy Research Institute of Singapore. This aggregation of demand is intended to enable agencies with smaller rooftop spaces or a smaller demand for solar energy to benefit from economies of scale and better pricing from bulk tenders.
SolarNova is also intended to deepen the capabilities of Singapore-based solar enterprises and encourage private sector adoption of solar energy.
The Housing & Development Board awarded its third solar leasing tender under the SolarNova programme in June 2018. Under this tender, solar photovoltaic panels will be installed at 848 HDB blocks and 27 government sites by the second quarter of 2020.
Intermittent Generation Sources (IGS). In 2017, the EMA further facilitated the entry of IGS by:
 
•	Introducing the Enhanced Central Intermediary Scheme (ECIS). Under the ECIS, contestable consumers with embedded generation (both IGS and non-IGS) below 10MW are not required to register with the Energy Market Company (the company which administers the wholesale electricity market) as a market participant to get paid for injecting embedded IGS output into the grid. SP Services Limited will pay the contestable consumers at the prevailing half-hourly wholesale energy price. Such contestable consumers can choose to have their output estimated based on the Solar Generation Profile for the purpose of paying applicable market-related charges.
Streamlining market registration for consumers with embedded IGS below 10 MWac who will not be selling their excess electricity output. Such contestable consumers can undergo a streamlined market participant and generation facility registration.
Test-bedding of Large-scale Energy Storage System. In 2017, following a request for proposal to implement a utility-scale Energy Storage System (ESS) test-bed, the EMA and Singapore Power Limited awarded two Singapore-led consortiums to implement Singapore’s first utility-scale ESS. CW Group Pte. Ltd and Red Dot Power Pte. Ltd will receive an estimated SGD17.8 million in grants for the initiative to build this test-bed. According to the EMA:
The test-bed is expected to be operational for three years at two substations located in the north and north-eastern part of Singapore and will have an aggregated capacity of 4.4 MWh.
Energy storage could support the deployment of IGS like solar by reducing peak demand and providing regulation reserves. The technology deployed will be evaluated for their performance under Singapore’s hot and humid environment.
 
Floating photovoltaic (PV) project
 
In October 2018, the Public Utilities Board of Singapore (PUB) and the EDB announced plans to establish large-scale floating solar photovoltaic (PV) systems to increase the adoption of solar energy in Singapore.
 
In 2016, the Public Utilities Board (PUB) together with the Economic Development Board studied the feasibility of deploying floating solar photovoltaic (PV) systems at the Tengah Reservoir to advance the growth and adoption of solar energy. PUB announced its intentions to scale up the testbed to deploy a 50MWp floating solar PV system by 2021.
 
EDB has also launched a request for information to explore the possibility of a 100MWp floating solar PV system for use in the private sector by beginning studies at Kranji Reservoir. According to the EDB, if feasible, this could reduce 52 kilotonnes of carbon emissions each year.
 
Renewable energy targets
 
In 2014, the Singapore government announced its commitment to raise the adoption of solar power to 350 MWp by 2020, which would constitute approximately 5% of the projected 2020 peak electricity demand. This is a non-legally binding target. According to the National Climate Change Secretariat, it is estimated that renewable energy can potentially contribute up to 8% of Singapore’s peak electricity demand. 
 
Carbon Tax Regime. On 1 January 2019, the Carbon Pricing Act 2018 (No. 23 of 2019) came into operation. The enactment of the Act is part of a suite of measures to help Singapore meet its commitments under the Paris Agreement of the United Nations Framework Convention on Climate Change where Singapore has pledged to reduce its emissions intensity by 36% from 2005 levels by 2030, and to stabilise emissions with the aim of peaking around 2030. The Act will be administered by the National Environment Agency (NEA).
 
The Act imposes a carbon tax on certain greenhouse gas emissions by specified persons and business facilities, measured from 2019 and obligations concerning the reporting of certain greenhouse gas emissions of business facilities, in place of the obligations currently in the Energy Conservation Act (Cap. 92C). The greenhouse gas emissions currently regulated under the Act are, broadly, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride (collectively known as GHG emissions).
 
The Act identifies persons and business facilities which must be registered under the Act. Generally, facilities from power generation sectors will be covered. The Act imposes obligations on two types of facilities:
 
•	Taxable facilities. These are facilities which emit 25,000 tons or more of carbon dioxide-equivalent of GHG emissions annually. Such facilities will have a carbon tax imposed on their GHG emissions and undertake more rigorous measurement, reporting and verification processes under the Act.
Reportable facilities. These are facilities which emit at least 2,000 but less than 25,000 tons of carbon dioxide-equivalent of GHG emissions annually. These facilities must have their GHG emissions measured and reported but will not be subject to a carbon tax.
The carbon tax will initially be SGD5 per ton of GHG emissions. The Singapore Government will review the carbon tax rate by 2023, with plans to increase it to between SGD10 and SGD15 per ton of emissions by 2030. According to the National Climate Change Secretary, the first payment of carbon tax will be in 2020, based on 2019 emissions.
 
The carbon tax will be applied uniformly without exemptions. It will take the form of a fixed-price credits-based mechanism. This means registered persons will pay the carbon tax by surrendering carbon credits equivalent to their carbon tax liability. These carbon credits can only be bought from the NEA at a fixed price. See box, Common forms of renewable energy.

9. What are the main obstacles to the development of renewable energy?

 
See Question 7.
 
Regarding the development of solar energy, the following key obstacles have been identified by the Energy Market Authority:
 
•	Singapore’s small geographical size, high population density and land scarcity limit the amount of available space to deploy solar energy.
Any power system with significant penetration of solar energy for electricity generation must manage intermittency appropriately, so as not to compromise grid stability. As Singapore does not import any of its electricity, it is highly reliant on a reliable electricity generation system that has low levels of intermittency.
The presence of high cloud cover and urban shading in Singapore poses intermittency challenges.
As for the development of other sources renewable energy, Singapore has no potential for harnessing hydro-electric or geothermal power and has low wind speeds and a low mean tidal range.

10.Are there any plans to build new nuclear power stations?

 
There have been no definitive plans announced by the Energy Market Authority.
 
In 2012, the government published the conclusions of a nuclear energy pre-feasibility study. The conclusion was that the currently available nuclear energy technologies were not yet suitable for Singapore. Singapore needed to strengthen its capabilities to assess the implications of evolving nuclear energy technologies and regional nuclear energy developments.
 
In 2014, the National Research Foundation announced the establishment of the Nuclear Safety Research and Education Programme, which will receive funding of SGD63 million over five years.
 
Authorisation and operating requirements

11. What are the authorisation requirements to construct electricity generation plants?

 
A person who wishes to own and operate an electricity generation plant will generally need to obtain an electricity licence to generate electricity granted under Section 9 of the Electricity Act (Cap. 89A). However, the actual engineering, procurement and construction work does not require a particular licence (apart from that which applies generally to construction works).

12. Are there any requirements to ensure new power stations are ready for carbon capture and storage (CCS) technology, or requiring a plant to retrofit CCS technology once this is ready?

 
There are no specific legislative requirements in place.

13. What are the authorisation and main ongoing requirements to operate electricity generation plants?

 
Authorisation
 
A person who wishes to own and operate an electricity generation plant will generally need to obtain an electricity licence granted under section 9 of the Electricity Act (Cap. 89A), unless certain exemptions apply (for example, the generating plant has a nameplate capacity of less than 10MV and is not connected to the transmission system).
 
In determining whether to grant or extend an electricity licence, the Energy Market Authority (EMA) must consider, among other things, the applicant’s:
 
•	Ability to finance the activity.
Experience in carrying on the activity.
Ability to perform the duties that would be imposed on that person under the Electricity Act and the electricity licence, if granted.
 
Ongoing requirements
 
Compliance with any restrictions or conditions in the electricity licence is required, as well as with the statutory duties to which it is subject to under the Electricity Act. Some of the key conditions and duties are:
 
•	Generally, a generation licensee must enter into regulatory agreements on specified terms, including:
a connection agreement with SP PowerAssets Limited for connection of its generating station to the transmission system;
an agreement with the power system operator for the purposes of creating a contractual relationship between the power system operator and the licensee as a market participant; and
an agreement with the market support service licensee for the provision of metering services.
A generation licensee must develop and maintain a reliable, efficient, coordinated and economical system of electricity generation in accordance with the market rules and applicable codes of practice and other standards of performance issued or approved by the EMA (section 20(1), Electricity Act).

14. What requirements are there concerning connection of generation to the transmission grid?

 
An applicant wishing to connect to the transmission grid must first submit the electricity connection application for the proposed generation plant to SP PowerAssets Limited (SPPA) (see Question 3), which will decide on the electricity connection scheme and advise the applicant accordingly. Certain details on the proposed generation plant must be submitted with the application form (as specified in Appendix C of the Transmission Code).
 
The applicant must also enter into a connection agreement with SPPA to connect its generating station to the transmission system.
 
Since the recent amendment to the Electricity Act (Cap. 89A) which came into force in May 2019, the EMA may, direct any electricity licensee to allow the transmission licensee to connect any electrical plant or electric line of the transmission licensee to any of the electricity licensee’s electrical plants, if the EMA considers the connection necessary in the public interest or to ensure the security and reliability of the supply of electricity to the public (section 20A, Electricity Act). The EMA’s direction may require the electricity licensee and the transmission licensee to enter into a connection agreement.

15. What requirements are there concerning the decommissioning of a generation plant at the end of its period of operation?

 
Approval from the Energy Market Authority (EMA) is required for a generation licensee to retire an existing generation plant. There is no expressed minimum lead time prescribed, however, consultation with and approval from the EMA is necessary. The generation licensee must comply with the Transmission Code, Market Rules and System Operation Manual throughout the decommissioning process.
  
Electricity transmission

Authorisation and operating requirements

16. What are the authorisation requirements to construct electricity transmission networks?

 
There are no specific authorisation requirements prescribed for the construction of electricity transmission networks (other than the permits and licences which apply generally to undertake construction works). However, in practice, only a person who holds an electricity licence to transmit electricity will undertake such works. Firstly, only such a licensee may transmit electricity. Secondly, the Electricity Act (Cap. 89A) confers on such licensee statutory powers to enter onto private land and premises to execute works connected to its transmission business.

17. What are the authorisation and main ongoing requirements to operate electricity transmission networks?

 
Authorisation
 
An electricity licence granted under section 9 of the Electricity Act (Cap. 89A) is required for the transmission of electricity.
 
In determining whether to grant or extend an electricity licence, the Energy Market Authority (EMA) must consider, among other things, the applicant’s:
 
•	Ability to finance the activity.
Experience in carrying on the activity.
Ability to perform the duties which would be imposed on that person under the Electricity Act and the electricity licence, if granted.
SP PowerAssets Limited (SPPA) is currently the only transmission licensee in Singapore.
 
Ongoing requirements
 
Compliance with restrictions or conditions in the electricity licence is required, in addition to the statutory duties under the Electricity Act. Some of the key conditions and duties are:
 
•	SPPA must not compete in the energy market, whether as a generator, retailer or trader (either directly or indirectly by ownership of companies engaged in such activities) due to the risk of a conflict of interest.
SPPA may be required to carry out work related to the development of a transmission system or the supply of electricity to any premises.
SPPA must comply with the Transmission Code, which sets out minimum conditions that it must meet in carrying out its obligations as the provider of transmission services.
Section 20(2) of the Electricity Act requires SPPA to:
develop and maintain a reliable, efficient, co-ordinated and economical transmission system in accordance with applicable codes of practice and other standards of performance issued or approved by the EMA;
facilitate competition in the generation and sale of electricity by making its transmission system available to those authorised to generate, trade or retail electricity or to provide market support services on terms which neither prevent nor restrict such competition; and
provide non-discriminatory access to its transmission system for the supply and use of electricity in accordance with the Electricity Act, its transmission licence and the market rules.
 
Transmission charges

18. How are the charges and conditions for the transmission of electricity regulated?

 
Charges for transmission services are regulated by the Energy Market Authority of Singapore under the terms of the electricity licence of SP PowerAssets Limited (SPPA).
 
The transmission licensee must publish statements which must provide certain details setting out the basis on which the fees and charges for transmission services are levied.
  
System balancing
 
19. How is electricity supply and demand balanced?

 
Presently, electricity supplied to the grid cannot be stored. Supply and demand of electricity must be balanced in real time.
 
Electricity is traded on the National Electricity Market of Singapore (NEMS), established under the Electricity Act (Cap. 89A). NEMS uses a form of auction pricing to settle transactions in the market.
 
The real-time dispatch of electricity (scheduling generators to supply energy, reserve and regulation) is determined by the operation of a wholesale market. Every half-hour, the market determines:
 
•	The dispatch quantity that each generation facility is to produce.
The reserve and regulation capacity required to be maintained by each generation facility.
The corresponding wholesale spot market prices for energy, reserve and regulation.
Electricity generators offer their capacity (specifying the price/quantity pairs) into the market and the Power System Operator (PSO) provides a forecast of the expected aggregated load along with any system constraints for that half-hour. The market then determines the least-cost dispatch quantities and the corresponding market clearing prices based on the offers made by generators. This results in a dispatch schedule that is at minimum cost to the market while respecting transmission and system conditions and constraints, reserve and regulation requirements and the dynamic characteristics of generation plant and meeting the projected load at each node on the transmission system.
 
All sales and purchases of electricity through the wholesale market are settled through the Energy Market Company. Electricity generators, electricity retailers and major users can enter into financial bilateral agreements outside the wholesale market.
 
The Energy Market Authority (EMA) has introduced certain measures to regulate demand which include the following:
 
•	In 2015, the EMA together with the Singapore Exchange and the electricity industry launched the Electricity Futures Market. Instead of purchasing electricity directly from the Electricity Market and being exposed to fluctuating half-hourly prices of electricity (see Question 3), contestable consumers can purchase electricity using an electricity futures contract instead.
In 2016, the EMA introduced the Demand Response Programme (DPR). The DPR allows contestable customers to voluntarily reduce their electricity consumption during peak consumption hours in exchange for a share in the system-wide benefits in terms of reduction in wholesale energy prices as a result of their actions. These reductions typically take place when wholesale prices in the Electricity Market are high or generation supply is limited. 
  
Electricity distribution

Authorisation and operating requirements

20. What are the authorisation requirements to construct electricity distribution systems?

 
See Question 14.
 
SP PowerAssets Limited deals with both electricity transmission and distribution.

21. What are the authorisation and the main ongoing requirements to operate electricity distribution systems?

 
The regime for transmission networks also applies to distribution systems (see Question 17).
 
Distribution charges

22. How are the charges and conditions for the distribution of electricity regulated?

 
The regulation of transmission charges are also applicable to distribution charges (see Question 18).
  
Electricity supply

Authorisation and operating requirements

23. What are the authorisation and the main ongoing requirements to supply electricity to end consumers?

 
Authorisation
 
An electricity licence granted under section 9 of the Electricity Act (Cap. 89A) is required for the retail of electricity, unless an exemption applies.
 
In determining whether to grant or extend an electricity licence, the Energy Market Authority (EMA) must consider, among other things, the applicant’s:
 
•	Ability to finance the activity.
Experience in carrying on the activity.
Ability to perform the duties which would be imposed on that person under the Electricity Act and the electricity licence, if granted.
A further licensing requirement applies to market participant retailers, who must be registered as a market participant with the Energy Market Company (EMC), the company that operates and administers the wholesale market, in order to purchase electricity directly from the wholesale market. Non-market participant retailers need not register with the EMC, as they purchase electricity indirectly from the wholesale market through the market support service licensee (MSSL) (see Question 3, Supply).
 
Ongoing requirements
 
See Question 2.
 
Compliance with restrictions or conditions in the electricity licence will be required, as well as with the statutory duties under the Electricity Act. Some of the key conditions/duties are:
 
An entity which is authorised by an electricity licence to retail electricity to a contestable consumer (retail electricity licensee) is required to:
 
•	Enter into regulatory agreements on specified terms, including:
a market support services agreement; and
for market participant retailers, a power system operator to market participant agreement to enforce each party’s rights and obligations under the market rules.
Comply with the Code of Conduct for Retail Electricity Licensees, which sets out minimum standards of behaviour that a retail electricity licensee must observe in retailing to consumers.
Develop and maintain a reliable, efficient, co-ordinated and economical electricity retail business in accordance with applicable codes of practice and other standards of performance issued or approved by the EMA.
Additionally, the MSSL who is required to procure the supply and sale of electricity to non-contestable consumers must comply with the Regulated Supply Service Code.

24. How is electricity traded between generators and suppliers?

 
All electricity generated by electricity generators is required to be sold and purchased in the National Electricity Market of Singapore (see Question 19).
 
However, electricity generators and retailers may enter into bilateral hedge contracts. These are purely financial arrangements whereby parties can buy and sell on the wholesale spot market and settle between themselves any financial difference implied by their bilateral contracts. Such contracts create price certainty for the parties and limit their exposure to spot market volatility. Parties may choose to use the Energy Market Company’s settlement system to settle financial differences under their contracts. 
 
Trading between generators and suppliers

25. How is electricity trading (between generators and suppliers) regulated?

 
The principle legislation governing the National Electricity Market of Singapore is the Electricity Act (Cap. 89A). In addition, the rights and obligations of the participants in the wholesale and retail markets are set out in the market rules and in the electricity licences and codes of practice issued by the Energy Market Authority.
 
Electricity price and conditions of sale

26. How is the price for electricity and conditions of sale regulated at the consumer and wholesale level?

 
The National Electricity Market of Singapore (NEMS) consists of a retail and wholesale market.
 
Consumer
 
According to the Energy Market Authority (EMA), retail competition in Singapore was introduced progressively. Large-volume electricity consumers became contestable first and the consumption volume threshold for contestability has been lowered over time (see Question 3, Supply). This has allowed further opening of the market to consumers to occur smoothly without undue technical demands being placed on the retail companies, while allowing smaller consumers the benefit of additional time to learn about and understand their options in the new retail market.
 
Contestable consumers may purchase electricity from:
 
•	A retail electricity licensee under a bilateral contract.
The market support service licensee (MSSL).
Directly through the NEMS at the wholesale spot rate.
The aim of contestability is to enable consumers to exercise choice and therefore benefit from competition.
 
Non-contestable consumers must procure their supply of electricity from the MSSL at the regulated tariff. Under the Open Electricity Market regime, residential and business consumers which would otherwise be classified as non-contestable consumers may choose to buy electricity from a retail electricity licensee at a chosen price plan, instead of from the MSSL at the regulated tariff.
 
Wholesale
 
The wholesale market consists of a “real-time” market or “spot” market for energy, regulation and reserve, which is administered by the Energy Market Company, and a “procurement market” for ancillary services required to maintain the secure operation of the power system.
 
The spot market uses a form of auction pricing to settle transactions in the market. At every half-hour, the spot market determines the:
 
•	Quantity that each electricity generation facility is to produce.
Reserve and regulation capacity to be maintained by each electricity generation facility.
Corresponding wholesale spot market price for electricity.
The quantities and prices in the wholesale market are based on price-quantity offers made by generation licensees on a half-hourly basis and demand forecasts prepared by the power system operator. The overall least-cost dispatch schedule and market prices are determined half-hourly. The price offered in the market for the most expensive generation needed to meet the forecast demand in each half hour period sets the system marginal price.
 
In addition to trading in the spot market, the EMA has made the entry into vesting contracts a condition of the electricity licences for certain generation licensees (that is, Senoko Energy Pte. Ltd., YTL PowerSeraya Pte. Limited and Tuas Power Generation Pte. Ltd.).
 
Vesting contracts are financial contracts between electricity generation licensees and SP Services Limited. These contracts commit such licensees to sell specified quantities of electricity for various periods at prices stipulated by the EMA. Such contracts remove the incentives for power generation companies to withhold generation capacity in order to increase spot prices in the wholesale electricity market. In essence, vesting contracts are intended to curb the market power of large players in the wholesale market in order to promote market competition and efficiency for the benefit of consumers. 
 
The EMA reviews the vesting contract level and parameters used to set the vesting price once every two years.

27. Do companies involved in the generation, transmission, distribution or supply of electricity have any statutory powers to undertake work (for example, compulsory purchase powers or street works powers)?

 
A generation licensee, market support services licensee or a transmission licensee which has been granted a licence under section 31 of the Electricity Act (Cap. 89A) can undertake certain works associated with carrying out activities authorised or required under its licence (such as excavating any land, street or drain, tunnelling and erecting equipment).
 
In addition, a person authorised in writing by a transmission licensee or market support service licensee has certain powers to enter upon any premises for specified purposes. These purposes include inspecting any electrical line or electrical plant belonging to the licensee and carrying out works necessary to maintain the supply of electricity (section 34, Electricity Act).
  
Tax issues
 
28. What are the main tax issues arising on electricity generation, distribution, transmission and supply?

 
Goods and services tax (GST), levied at 7% under the Goods and Services Tax Act (Cap. 117A) apply.
 
A guide on the GST treatment of the transactions in the National Electricity Market of Singapore (NEMS) can be found at the Inland Revenue Authority of Singapore’s website at www.iras.gov.sg/irashome/GST/GST-registered-businesses/Specific-business-sectors/Energy.
 
The Carbon Pricing Bill was passed by Parliament in March 2018 and gazetted on 1 June 2018. The Carbon Pricing Act 2018 came into operation on 1 January 2019. The Carbon Pricing Act imposes a carbon tax on certain greenhouse gas emissions by specified persons and business facilities, measured from 2019 onwards. Generally, facilities from the power generation sector will be covered. (See Question 8).
  
Reform
 
29. What reform proposals are there for the regulation of the electricity sector?

 
Power generation investments
 
In July 2016, the EMA published a determination paper on the implementation of several initiatives to improve the regulatory environment for power generation plantings and to facilitate future power generation investments in Singapore. Two of the key initiatives are:
 
•	Requiring generation licensees to inform the EMA of their indicative generation plans with a four-year notice period.
Setting out a land allocation framework with a two-stage process to allocate safeguarded utility land to investors for new generation assets. Under this framework, the EMA will periodically release land which has been safeguarded and make available this land for power generation planting.
In June 2019, the EMA issued a Request for Information paper on facilitating the deployment of new and innovative generation technologies, seeking information from participants of the industry on the following matters:
new and innovative solutions that can enhance generation efficiency of the current fleet and new generation plantings; and
measures that can encourage the adoption of such new and innovative solutions to enhance power sector effectiveness.
 
Forward Capacity Market
 
As the spot market does not guarantee timely resource adequacy, to ensure electricity supply reliability the EMA has been exploring the development of a Forward Capacity Market. In June 2019, the EMA published a consultation paper to seek comments from market participants for the development of a Forward Capacity Market to enhance the wholesale electricity market. A Forward Capacity Market is a competitive market-based auction which procures adequate resources one to four years in advance. The aim of the Forward Capacity Market is to maintain resource adequacy by providing adequate incentives to existing resources and new investment and maximise economic efficiency to minimise long-run costs to consumers.
 
Futures Incentive Scheme
 
The EMA launched the Futures Incentive Scheme (FIS) in August 2018 to invest in and develop Singapore’s electricity futures market. The FIS consists of two phases (with each phase to take place over a period of one and a half years). The 1st FIS phase commenced on 1 August 2018 and will end on 31 January 2020 and the 2nd FIS phase will commence on 1 February 2020 and end on 31 July 2021. Under the 1st FIS phase, successful applicants will be selected by the EMA to provide market making services for the quarterly and monthly base load electricity future contracts. The EMA will assess the market performance from the 1st FIS phase and has the right to revise the market making obligations with respect to the 2nd FIS phase. Following the FIS, EMA will review the need for further market support schemes. The EMA has advised participants in the industry to assume that there will be no further market support schemes after July 2021 in making commercial decisions.
 
Contributor profiles

Kelvin Wong, Partner

Allen & Gledhill LLP
T +65 6890 7644
F +65 6302 3048
E kelvin.wong@allenandgledhill.com
W www.allenandgledhill.com
 
Professional qualifications. Singapore Bar (1996), Bar of England and Wales, Middle Temple (1995)
 
Areas of practice. Construction and engineering; corporate and commercial; employment; energy; infrastructure and projects.
 
Languages. English
 
Professional associations/memberships.
 
•	Associate Member, Chartered Institute of Arbitrators, England.
Director, AETOS Holdings Pte. Ltd.
Deputy Chairman, Law Society Pro Bono Services Limited.
Director, Singapore Anti-Narcotics Association.
Publications
 
•	Doing Business 2020 - Contracting with the Government (Singapore chapter), World Bank.
The International Comparative Legal Guide to Public Procurement 2019 (Singapore chapter), Global Legal Group.
Commercial transactions - Supply of Goods 2019 (Singapore chapter), Practical Law.
Benchmarking Public-Private Partnerships Procurement 2017 Indicator, World Bank.
Employment & Benefits Global Guide 2016/17 (Singapore Chapter), Practical Law.
 
Tan Wee Meng, Partner

Allen & Gledhill LLP
T +65 6890 7518
F +65 6302 3042
E tan.weemeng@allenandgledhill.com
W www.allenandgledhill.com
Professional qualifications. Singapore Bar (1997)
 
Areas of practice. Corporate and commercial; energy; infrastructure and projects; technology; media and telecommunications.
 
Languages. English
 
Publications
 
•	The International Comparative Legal Guide to Public Procurement 2019 (Singapore chapter), Global Legal Group.
Benchmarking Public-Private Partnerships Procurement 2017 Indicator, World Bank.
 
Yeo Boon Kiat, Partner

Allen & Gledhill LLP
T +65 6890 7629
F +65 6302 3024
E yeo.boonkiat@allenandgledhill.com
W www.allenandgledhill.com
Professional qualifications. Singapore Bar (2010)
 
Areas of practice. Corporate and commercial; employment; energy; infrastructure and projects; technology; media and telecommunications.
 
Languages. English
 
Publications.
 
•	Getting The Deal Through: Corporate Reorganisations 2018/19, Law Business Research (Singapore chapter).
Practical Law Commercial transactions – Agency 2019 (Singapore chapter).
Practical Law Commercial transactions – Distribution 2019 (Singapore chapter).

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