The Energy Market Authority (EMA) has announced a series of enhancements to its regulatory framework for electricity retailers, set to be implemented starting in August 2023. These new requirements aim to ensure that only credible and financially stable participants can sell electricity to consumers, thereby increasing the overall integrity of the electricity market.

As part of the new regulatory measures, electricity retailers will need to demonstrate a tangible net worth of at least S$1 million when applying for or renewing their licenses. This requirement is intended to ensure that retailers have sufficient financial standing to navigate market volatilities. Additionally, retailers must hedge at least 80% of their retail contract positions and provide a performance bond for any unhedged positions. These measures are designed to protect consumers from sudden market disruptions and premature contract terminations.

In conjunction with these enhancements, EMA will implement a centralized process to improve coordination in developing new generation capacity in the private sector. This initiative reflects the authority’s commitment to ensuring that Singapore’s energy supply meets increasing demand while embracing cleaner and more sustainable energy sources. EMA is proactively assessing electricity demand on a rolling 10-year basis and will issue requests for proposals (RFPs) if existing capacity is deemed insufficient.

Feedback from the industry has been generally supportive of the new requirements. Retailers recognize the importance of implementing stricter financial criteria and screening processes. For instance, Sam Lim, senior vice-president of Tuas Power, expressed confidence that these measures will strengthen the viability of retailers during extreme market fluctuations, ultimately benefiting consumers.

PacificLight Energy’s general manager, Geraldine Tan, noted that her company has long adopted robust risk management strategies that already exceed the EMA’s new hedging requirement. This proactive approach enables PacificLight to offer a diverse range of plans tailored to customer needs, ensuring greater stability amid market uncertainties.

As part of its centralised process, EMA has launched an RFP for a new combined-cycle gas-turbine plant with a minimum capacity of 600 megawatts, expected to be operational by 2028. The authority encourages private companies to participate in this tender to develop hydrogen-ready and lower-carbon intensity solutions, thus contributing to Singapore’s energy transition goals.

These regulatory changes come in the wake of a temporary price-cap mechanism introduced in July to manage extreme price volatility in Singapore’s wholesale electricity market. The EMA aims to stabilize the market and safeguard consumers following significant fluctuations observed during the energy crisis related to the Russia-Ukraine war, which led to several retailers exiting the market. As of now, ten active retailers remain, including four independent electricity providers catering to consumers.