Singapore is looking to increase its low-carbon power imports to 6GW by 2035, and is exploring various ways to achieve this. Argus spoke to the Energy Market Authority's (EMA) assistant chief executive of the energy policy division Chua Shun Loong about the importance of collaboration and the challenges in cross-border energy trade. Edited highlights follow.
The EMA just announced it has agreed with the Australian Energy Regulator (AER) to co-operate on energy. Is the EMA considering other potential future partnerships?
We're open to partnerships at all levels. On the government-to-government front, we have the AER, as well as our partnerships with our Swedish, French, and American friends as well.
We have this concept of overlapping circles of co-operation. So we're not bothered at all if we are doing something with the Swedish government while doing something similar with our French counterparts as well.
Asean has a lot going for it in terms of renewable energy potential, but the only way for us to harness it is to move in a co-ordinated direction at a regional level.
Nuclear technology is starting to be very promising. The signs say that it will be a lot safer, and also lower cost, because small modular reactors have the potential to be rolled off the production line and mass produced.
We are at the stage where we are studying and trying to acquire the capabilities to make our own independent assessment, to verify the claims made by all these technology vendors. This means we have to strike up very close and trusted partnerships. Some of this technology and data is very sensitive. We are advancing partnerships on nuclear at a government-to-government level, but also with businesses, telling them send us your data so we can better understand.
We're also trying to figure out how to create a new opportunity in Asean. Europe is maximising the use of biofuels in all forms, including biomethane for power generation. Asean arguably has more resources for biomethane, because of the way southeast Asian plantations and farms are run, a lot of animal and agricultural waste is just left out in open pits to ferment, and this releases methane. Just by collecting and sequestering all this methane, you can help.
Singapore wants to import more low-carbon power from neighbouring countries. What are some of the challenges the EMA is facing when it comes to cross-border connections?
I think the single biggest challenge is that this is first of a kind in our region. Everybody is trying to learn along the way.
The first challenge is in terms of the regulatory posture. In Singapore, we have a liberalised merchant model. If another liberalised merchant model is trying to connect to us, it's easy. But when you have a regulated market trying to connect to a liberalised market, then on the regulatory front, how do we think about the interoperability?
Another example is renewable energy certificates (RECs), where we are missing three elements. First, you need a credible international cross-border standard. There is high-level guidance, for instance on no double-counting. But there must be actionable guidance to achieve that.
The second is a process to accelerate conversations between governments. This is where Singapore has come in, and we are encouraged that our partners are interested to work with us. That is why we decided to partner with the International Tracking Standard Foundation on the cross-border RECs framework. It is not a standard per se, but a guided conversation. The standard will need to come from an international body.
The third element missing is the private sector, for instance in registries convincing countries that they are credible for cross-border trading.
[Another challenge we are facing] is on the technical front. When you have a lot of grids connected to each other, you are providing mutual support to each other. A larger grid means you are even more robust against shocks, because with a larger pool of water, a smaller ripple will create a smaller impact. So grid-to-grid is so good, but how are you going to figure it out on the technical front?
Another obstacle is the commercial aspect. How can offtakers give project developers the confidence to embark on what could be a 30-40 year commitment? And for the offtakers, they are wondering, this is a first of its kind, until I see a clear signal from an exporting country that they want to do this and they want to provide stable conditions, why sign a 25-year offtake contract?
So it all starts with the right business environment and the signals. Do market participants have the confidence that this contract will be upheld? That's why all these discussions at Asean are so important.
What have you heard from industry regarding the cross-border RECs framework, especially in terms of the ambition to promote high-quality trade, versus feasibility of the rules?
The industry thinks the initiative is in the right direction, because governments are signalling they are willing to collaborate on cross-border RECs. They think the draft could work for them.
We will not compromise on credible standards; that is the point of this exercise. But we want to be pragmatic — we shouldn't insist on a particular way of doing things. We are hearing from supply chain players how things work regionally are where tweaks may be needed.
What we have now is a trial balloon and a signal. We have a good technical basis to work on, but we need to find more partners to develop the final cross-border REC framework.
REC prices in Singapore have fallen and there is concern that cross-border supply can further the price drop. Is EMA doing anything to address this?
Singapore is a liberalised energy market. Broadly, I don't think EMA will want to disrupt the market; we don't want to be a command-and-control centre — we prefer to let the market settle.
I see a lot of positive signs. Because of the rise of artificial intelligence, power demand is going to rise. Our biggest concern is whether we can catch up to demand and provide the right products and services they want.
