Techblog
What SMEs need to know about the liberalisation of the Singapore Energy Market
Singapore's electricity market is gradually being opened up to retail competition. That means competitively priced electricity packages tailored to individual business needs and potential savings to contestable consumers.
Singapore's electricity market is in the process of being opened up to retail competition, and SMEs stand to gain. A deregulation plan under implementation by the Energy Market Authority (EMA) is making available an efficient supply of competitively priced electricity packages to contestable consumers.
Liberalisation of electricity can mean substantial savings to businesses. If your firm qualifies as a contestable consumer, you may choose the provider and electricity package that best suits your business needs.
Why and What?
The plan for retail competition was prompted by the view that the electricity industry is crucial to the Singapore economy. The rapid growth of and expanding demand for domestic and commercial energy requires an efficient and modern electricity system. The reliable supply of electricity, at a competitive price, is central to a thriving industrial and commercial base.
Until 2001, Singapore had a single electricity retailer, SP Services Ltd, which supplied all consumers. Following worldwide trends in deregulation and privatisation, Singapore has followed suit: eligible businesses are now able to choose their power companies.
The introduction of competition among power providers benefits contestable consumers with improved services, greater efficiency, competitive prices, and innovative products.
What does this mean for SMEs?
The liberalisation of the retail electricity market has been implemented in phases to ensure a smooth transition. Thus far, the liberalisation has opened up 75% of total electricity sales in Singapore to competition, according to the EMA. A total of about 13,000 businesses are able to exercise their choice of electricity purchase.
Large-volume electricity business consumers became contestable first. The consumption volume threshold for contestability has been lowered over time. Eventually, all non-residential consumers in Singapore will become contestable when the retail electricity market is fully liberalised.
Currently, if your company has a single site with an average electricity consumption of at least 10,000kWh per month, you are eligible to apply for immediate contestability.
If your company has a single or multiple sites, with an average combined monthly consumption that is at least 8,000kWh per month, you will receive a letter from SP Services informing you of your eligibility to become contestable from April 1, 2014.
How can SMEs benefit from this?
Contestable consumers will have three options:
• they will be able to buy electricity from a licensed electricity retailer such as Sembcorp Power,
• buy electricity directly from the wholesale electricity market as a direct market consumer, or
• buy electricity indirectly from the wholesale electricity market through SP Services Ltd.
The final phase of retail market liberalisation in the next years will involve the remaining consumers, comprising mainly small businesses and household consumers. They represent 25% of the total electricity sales in Singapore. Currently, they continue to purchase their electricity from SP Services Ltd.
Eventually, once your business qualifies for contestability, you should then go out and start shopping around for competitively priced energy packages.
Companies interested in learning more about contestability may go to this page on the Energy Market Authority's website at http://www.ema.gov.sg/page/5/id:43/
Have a question about energy savings or the liberalisation of the Singapore energy market? Why not ask our Energy Expert Mr. H C Chew, General Manager of Sembcorp Power. Send in your questions, or share your own energy savings tips, and stand to receive exclusive premiums that can help you save energy and costs!