The electricity system in Singapore works similarly as it does in most other regions. If you are wondering how electricity works in Singapore, you should start by understanding the three main areas of the business which are production, distribution, and retailing. Understanding how each part of the system works only requires a few basic concepts.
#1. Energy production
Energy production or generation in Singapore relies heavily on natural gas. Today, around 95% of all the electricity produced in Singapore is done using natural gas while just a decade ago it was 74% with the rest being made using fossil fuels. According to the Energy Market Authority of Singapore, known as EMA, 15 individual entities currently hold a license to produce electricity. Out of all 15, 6 of them generate 90% of the total electricity produced for domestic use.
Renewable energy is stated to increase but for the moment, it represents a very tiny fraction of the total electricity production. Due to cost restrictions, the only renewable energy source that is viable for Singapore is solar which is close to reaching 350 MW.
#2. Distribution and Transmission
Unlike production, for distribution and transmission, there is only one entity registered. SP Power Assets Limited, known as SPPA, is the sole owner of the entire electric energy transportation system in Singapore. The system comprises a high voltage network that is both underground and above ground transportation and distribution lines. For domestic areas, the distribution network is mostly below ground.
The entire infrastructure is a means of getting electricity from a plant that produces electricity to final consumers. It is a vital component of the entire energy system. If you want to get a better grasp of how electricity works in Singapore, you need to look at the distribution network as an important part of the system.
The final part of the system refers to retailing. Once energy is produced and has an infrastructure to be transported, someone is needed to sell the electricity to consumers. Up until November 2018, everyone’s bill had the same regulated tariff. Everyone was also billed by the same company which was Singapore Power, now known as SP Group. SP was and still is a state-owned electricity retailer. After November 2018, full liberalization was enacted.
Following the liberalization of the energy market, other retailers were established. This led to more competition in the market which also affected pricing. The retail consumer can now choose between different plans and subscriptions that may have fixed tariffs for the contractual period or they can choose the regulated tariff. A greater degree of choice was introduced and an opportunity for consumers to save money on their energy bills.
Understanding how the electricity works in Singapore offers a better view of the challenges and opportunities that the energy sector is dealing with. This also helps the consumers to understand the distribution process of energy and how they come up with their bills. For the consumer, the liberalization of the energy market meant lower tariffs.
When there are no strict regulations, the market regulates itself to gain market share as long as there is competition. The retail consumer is the main beneficiary of a free energy market.