Singapore and Indonesia on 6 July signed deals aimed at strengthening their commitment to collaborating on cross-border electricity trade.
Representatives from the two countries signed multiple agreements during the Singapore-Indonesia leaders retreat in Jakarta, Indonesia, with cross-border electricity trade being the main focus of discussions.
Indonesia has appointed sovereign wealth fund Danantara Indonesia to lead cross-border power trade with Singapore, Singapore's Ministry of Trade and Industry and Danantara said in a joint statement. Danantara, through its investment arm Danantara Investment Management, signed two memoranda of understanding (MoUs) with Singapore's electricity retailer Keppel Electric and energy firm Sembcorp Utilities to explore co-operating on the offtake of low-carbon electricity imports.
Danantara has also signed an MoU with Singapore Energy Interconnections (SGEI) to facilitate information sharing and co-operation on the commercial and technical aspects of cross-border interconnector development.
Ministers from the two countries "[look] forward to the materialisation of 3.4GW or more of projects by 2035 on a commercial basis", the joint statement said. These projects are aimed at advancing energy connectivity and decarbonisation for both countries, including by accelerating investments in Indonesia's clean energy sector.
The countries will work on their respective regulatory frameworks, policies and requirements to enable cross-border electricity trade and investment.
The latest discussions build on agreements signed by the countries last year on cross-border electricity trade, carbon capture and storage, and setting up a joint sustainable industrial zone.
A key issue that remains is electricity pricing, and negotiations on this aspect are not yet completed, Indonesia's energy ministry (ESDM) said on 7 July. Under Indonesia's current regulations, the government has the authority to set prices. Indonesia is seeking an arrangement that opens energy export opportunities, as well as provides balanced economic benefits for both countries, the ESDM said.
Singapore and Indonesia said they will also develop a cross-border Renewable Energy Certificate (REC) framework to track power trade ahead of physical electricity delivery.
Singapore businesses already use regional RECs to match power consumption with procured renewable electricity. But these RECs cannot be used for claims under corporate standards such as RE100, which requires sourcing of renewable power within the same market as companies' operations — or where physical interconnections exist.
Singapore published a draft cross-border REC framework last year that focused on using bilateral work to harmonise standards with partner countries. The Asean Centre for Energy is also working on a broader system meant to align standards across the region.
Participants expect regional RECs recognised under an eventual cross-border framework with Singapore to command a premium to standard contracts.
Argus assessed current-year Singapore solar I-RECs at $23.50/MWh last week, while Indonesian current-year solar I-RECs were recently offered at under $3.50/MWh.
Indonesia is seeking to diversify its energy sources and reduce its reliance on fossil fuels by accelerating the development of renewable energy. Indonesia's president Prabowo in March ordered the construction of 100GW of solar power to "implement the electrification of renewable energy from solar power in the shortest possible time".
