In a bid to avoid wild swings in electricity prices brought about by energy shortages, the Singapore government will establish an entity to centralise the procurement and supply of gas for the power sector.
The entity will aggregate gas demand from power generation companies (gencos), which currently each decide on the volume and tenure of gas to procure based on their own commercial considerations.
Unveiling the centralised gas procurement framework in his opening speech on Monday (Oct 23) at Singapore International Energy Week (SIEW), Minister for Trade and Industry Gan Kim Yong noted that a stable and secure power system was crucial in the transition towards net zero emissions.
In his speech to industry professionals and policymakers, Mr Gan said decarbonisation efforts were at stake.
“We observed this during the recent global energy crisis, when some countries had to resort to refiring coal plants to bring down electricity prices,” said the minister.
He noted that the world was likely to experience more episodes of volatility as the energy transition progressed.
“Our experience in recent years has demonstrated that our current gas procurement framework, which relies on individual power generation companies’ procurement strategies, does not provide assurance that the system, as a whole, will have enough gas to meet our needs during a crisis when market conditions are uncertain.
“As the global gas market conditions are expected to be more volatile with the energy transition, we need to rethink our approach to gas procurement.”
Mr Gan stressed the need for secure and reliable natural gas supplies as 95 per cent of Singapore’s electricity is generated with natural gas.
In its 16th iteration this year, Singapore International Energy Week is an annual event. It will run until Friday at the Sands Expo and Convention Centre at Marina Bay Sands.
