Maintaining Singapore's Energy Supply Reliability

Mr Gerald Giam Yean Song asked the Minister for Trade and Industry (a) what domestic energy generation options the Ministry had considered prior to proposing the import of electricity from regional countries; (b) whether the Ministry plans to (i) set a cap on the proportion of imported energy as part of our overall energy supply and (ii) set a cap on the amount that individual countries can export energy to Singapore, in order to limit the risk to Singapore's energy security; and (c) what other steps the Ministry will be taking to ensure Singapore's energy security when the trial is expanded.

Mr Saktiandi Supaat asked the Minister for Trade and Industry (a) whether Singapore will be participating in the Sun Cable project; (b) if so, how much of Singapore's energy supply will come from the Sun Cable project; (c) what efforts are in place to diversify our energy sources; and (d) what are the associated risks and cost fluctuations of energy diversification.

Mr Saktiandi Supaat asked the Minister for Trade and Industry (a) how have post-COVID-19 needs impacted Singapore's energy market outlook; (b) whether Singapore's plan to import electricity from Malaysia is limited to renewable energy; (c) what is the process for the energy to be sold to Singapore; and (d) how can energy supply reliability be assured as more clean electricity from other countries are imported into Singapore.

Mr Chua Kheng Wee Louis asked the Minister for Trade and Industry (a) what is the current fuel mix for electricity generation derived from renewable energy sources; (b) how has this changed over the last 10 years; and (c) what is the target mix for the amount of electricity generated from renewable energy sources in 2030 and 2050.

Thank you. Mr Speaker, electricity demand is expected to have declined by around 2% to 4% last year in 2020. This was amidst the on-going COVID-19 pandemic. However, electricity demand will rebound as the economy recovers and grows. This is also driven by new users, such as data centres, 5G telecommunication networks, agri-tech facilities as well as electric vehicles.

We will harness the four switches to transform and diversify our energy supply. This is to help us achieve our vision of a clean and efficient energy future. These four switches comprise natural gas, solar energy, regional power grids and emerging low-carbon alternatives like hydrogen.

Singapore has progressively transitioned from oil-powered power plants since the early 2000s to adopt natural gas. Currently, this is the cleanest burning fuel. Natural gas currently accounts for 95% of the electricity produced in Singapore and I think all Members here in this House would appreciate the fact that we lack alternative energy sources. We do not have the natural resources, land area as well as climatic conditions necessary for the large-scale deployment of renewable energy sources, such as hydro and wind. Natural gas will continue to be the mainstay and main source of energy for power generation to serve our households and industry reliably in the medium term, and this is as we continue to develop the other three switches.

Our second switch, which is solar energy, is currently the most viable source of renewable energy within Singapore. Over the last 10 years, installed solar capacity has increased more than a hundred fold, from 3.8 megawatt-peak in 2010, to around 400 megawatt-peak last year, in mid-2020. We are accelerating our efforts and will almost quadruple our solar capacity to 1.5 gigawatt-peak by 2025 – five years from now – and, by the end of 2030, we hope to achieve 2 gigawatt-peak. So, by 2030, we expect our second switch to supply around 3% of our total electricity consumption. And, of course, depending on the state of technology at that point in time and cost, we hope to be able to do more.

Our local companies partner the Government in the deployment of solar photovoltaic systems. For example, the Sunseap Group is a major participant in the SolarNova programme, which deploys solar panels in public sector buildings and spaces. When these companies invest in overseas renewable companies and projects, they can bring valuable insights and capabilities back home here in Singapore. These projects may, some day, also export electricity to Singapore as well. This brings me, therefore, to the third switch, and that is on regional power grids.

Regional power grids, or electricity imports, is our third switch. Today, some Southeast Asian countries have an abundance of hydroelectric power and other renewable energies. If we can connect the regional grid well, it will provide greater resilience and sustainability for the entire system. For a start, we are trialling imports of up to 100 megawatts from Peninsular Malaysia. One hundred megawatts would be about 1.5% of our peak electricity demand. So, there will be minimal impact on the reliability as well as cost of our electricity supply. Our preference, of course, is to import electricity from renewable energy sources. Hence, the “cleanliness” of the generation source will be a consideration in selecting the importer. The Energy Market Authority (EMA) will select the importer through an open and competitive selection process, and it is expected to sell electricity via the Singapore Wholesale Electricity Market (SWEM) to interested buyers.

Other companies, like Sun Cable, have also approached EMA to import electricity to Singapore. We welcome these interests, but we have to also be mindful to pace these imports to ensure that they complement and do not undermine the reliability of our electricity supply as well as the stability of our electricity market. Sir, discussions on Sun Cable's proposal to supply solar power from Australia’s Northern Territory to Singapore are on-going. At this particular point in time, EMA is unable to share details, given the commercial sensitivities – a point that I believe everyone in the House would appreciate.

Last but not least, for our fourth switch, we are also working intensively with the industry and research community to study emerging low-carbon technologies, such as hydrogen and carbon capture, utilisation and storage. We will facilitate the development of these technologies through various research, development and demonstration funding initiatives, including a Low-Carbon Energy Research Funding Initiative. This initiative will see around $50 million being used to explore areas such as the supply, storage and downstream uses of hydrogen, as well as carbon capture and storage for use in building materials or fuels.

By tapping on all four switches, Singapore will be able to diversify our energy sources. This will enhance our access to secure and competitively priced energy supplies and this will reduce our energy security risks. The future energy mix will depend on technological advances in the four switches. This will need to be complemented by efforts to enhance energy efficiency across all sectors and consumers. The Government will work hand-in-hand with our workforce, researchers, industries and consumers, to achieve our vision of a cleaner, a more efficient and a more secure energy future.

I thank the Minister for the answers. I have two supplementary questions. The first question is in relation to energy resilience, and I would like to point out that the Minister had shared and answered some of the questions that I had in mind for my supplementary question. But the question I have now is, the Minister mentioned that the energy mix would be dependent on the technology improvements over time, but can you roughly share the percentages target for some of these switches at this point in time. Because if you look at the electricity reliance now, we are relying a lot on natural gas. I think more than 95% of the electricity generated in Singapore is via imported natural gas and it is largely from Malaysia and Indonesia. So, there is a concentration effect, by country, on Malaysia and Indonesia. The mix by country, for one, if you can share, going forward over the medium to long term, and also in terms of the switches, if you can share.

My second question is, as we proceed to these four switches, going forward – over the next five, 10, 20, 30 and 50 years – for example, in Malaysia's case where we are trying to get the electricity imports from Malaysia into 2021, we have the electricity connector infrastructure with Malaysia. Going forward if the Sun Cable project does materialise, how do we get some of this direct electricity connectivity to Singapore, when we have these switches exposing us to various countries as far afield as Australia, if the Sun Cable project does happen and as far afield as Indochina, going forward?

I thank Mr Saktiandi for his questions. With regard to the percentage breakdown of the four switches, at this particular point in time, it is 95% natural gas. The natural fossil fuels which we, as I have alluded to earlier is the cleanest fossil fuel today.

It is difficult to give a percentage breakdown but suffice to say that by 2030, we expect to peak in terms of carbon emission at about 65 million tonnes of carbon dioxide emission. Our target is to halve that by 2050. So, from 65 million tonnes, we will halve it to 33 million tonnes by 2050. By the latter half of this century, we will achieve a net zero carbon emission. That is the target that we have set for ourselves.

Depending on the technology development over the next 10,15 to 20 years, we should see an increased migration towards renewable energy, of which solar is one of them, and a higher degree, depending on the trial import of this 100 megawatt from Peninsular Malaysia, a higher reliance on drawing from the regional power grid as well. In fact, just last year, declared our intent to procure another 100 megawatt from the Lao PDR via the Lao, Thailand, Malaysia, Singapore grid network.

We hope that in time, we can also, through this, reach out to more ASEAN countries to tap on this regional grid. That is another one of our diversification strategies.

To the extent that we are able to draw from the regional power grid, we certainly would. The Sun Cable project, as I have alluded to, is also something which we are in active negotiations. Obviously, we are not at liberty at this particular point in time to communicate the details of it because of the commercial sensitivities.

To the Member's last point about the concentration risk, today, a significant amount of the natural gas that we are using to burn comes from Malaysia and Indonesia through the PNG. But we have also now diversified the sources of the procurement via LNG, the liquefied natural gas, from other countries further afield and that includes the Middle East, UAE and so on. The exact breakdown of that, at this particular point in time, I cannot provide to the hon Member.

I thank the Minister for the detailed explanation. I have got two supplementary questions. The first is in relation to the setting off targets. I note the Minister's speech that we are expected to employ two gigawatt peaks of solar energy by 2030 which we expect to contribute to 3% of our electricity generation needs, and also, that we are going to have an emissions target for 2030 and 2050. And in relation to these, if I may ask, if the Ministry would consider setting a target mix for the amount of electricity that is going to be generated from renewable energy sources as a target that we can strive for together as a nation?

If we look at the IEA estimates, at present, globally, about 30% of the electricity generation is really from renewable sources. I recognise that we have geographical constraints but is that perhaps a goal that we can strive towards, especially when we are already considering new green energy sources such as hydrogen, which I recognise that the EMA is already studying.

The second is in relation to the calculation of electrical tariffs. Right now, given that 95% of the energy mix is derived from natural gas, I think the fuel cost component is pretty much based on average natural gas prices, especially if future transmission from regional grids are involved. How then would the fuel costs as well as network costs component be calculated, and how would that be passed on to consumers at the end of the day?

I thank the hon Member of Parliament for his questions. To the first point, in terms of working on the target, indeed, we are and we have been looking at the different technologies that are available at this particular point in time. Also, through working with the research institutions, the universities and so on, to see how we can also take on some of these initiatives with regard to carbon capture utilisation to see how we can set that target. In due time we would be able to share that, once a more definitive landing on some of these technologies are available.

With regard to the renewable energy targets, the two gigawatt peak in terms of solar power, the renewable solar power, will come in by 2030. We are on track by 2025 to achieve 1.5 gigawatt. To reach that target by 2030 should not be a major problem. In fact, we hope that we can do even better than that.

With regard to the electricity tariffs, it is, at this particular point in time, still a fairly commercial venture. As I have alluded to earlier on, the pricing will be competitive. There will be an open transparent bidding process and this electricity will then be sold into the Singapore Wholesale Electricity Market.

When we work out the arithmetic behind it, from the import of the 100 megawatt from the regional power grid, the pricing should not be significantly higher than what we are already getting today in terms of the electricity tariffs. So, I hope that that reassures the hon Member of Parliament.

Thank you, Mr Speaker. Before I begin, let me declare that I am a senior executive for a gas and engineering company that deals with energy sources. I want to thank Minister for his response on the diversification to ensure our energy needs over the years. But with respect to the fourth switch, I have this question for Minister. When it comes to dealing with low carbon energy sources or alternatives, the very key aspects are around policies and the other one around subsidies and fundings.

Our current carbon tax programme is actually very low compared to many countries in the world and we have a very low target that we want to achieve by 2030 and beyond. So, I want to know how this lever is going to impact the kind of low-carbon alternatives we will have in future.

And for the other aspect around subsidies – will the Government look at more options apart from just funding the technology programmes, but directly subsidising some of the very attractive alternatives in order for us to achieve this target of decarbonisation, earlier than later.

Mr Speaker, I thank the hon Member Miss Cheryl Chan for her very insightful questions and her points. For the carbon tax, even if we raise the carbon tax significantly, it is not going to move the needle that much in terms of the overall pricing. Where we are now looking at is also, as I have said, the fourth switch. It is not just about carbon capture, utilisation and storage; it is also looking at hydrogen utilisation and leveraging on this hydrogen technology.

To that end, EMA and the Ministry are actively pursuing significant projects to see how we can, not just extract the hydrogen, but also in terms of the transportation of that hydrogen. If we are able to tap on it, it is going to be the cleanest fuel, the byproduct of which is water.

These are the few big initiatives that we are currently embarking on today.

Other than carbon capture, we are also exploring employing carbon credits and contemplating some form of a carbon trading platform so that we can leverage on the multiple initiatives that are available to help us reduce our carbon footprint.