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Will the energy bill reduce competition in SG’s electricity
LEGAL BRIEFING Will the energy bill reduce competition in SG’s electricity generation market?
Under the bill, the Singapore regulator will be allowed to be a market player.
Apart from the Energy Bill, laws such as the Electricity Act and Carbon Pricing Act 2018 also have measures that encourage the adoption of green technologies, standards, and practices
The Energy (Resilience Measures and Miscellaneous Amendments) Bill—particularly section 3(i) that allows the Energy Market Authority (EMA) to be a market player in the electricity generation market—has sparked concerns amongst stakeholders.
RHTLaw Asia LLP Managing Partner Azman Jaafar told Asian Power that under the said provision, section 6 of the Electricity Act will be amended, such that EMA “will not be required to obtain an electricity license to acquire, build, own, and operate critical infrastructure that generates electricity.”
“As a regulator, it appears that EMA may block, deter, or stop competitors under the Singapore Wholesale Electricity Market from competing against EMA-owned or operated energy units,” Jaafar said when asked about the possible conflicts which could arise from the bill.
“It can also pass regulations, which can favour energy generation units that it has acquired or built, as well as those that it owns or operates,” he added.
This advantage given to EMA could also give rise to the depression of wholesale electricity prices.
Citing feedback from the public consultation held for the bill, the lawyer said: “Energy generation units operated by the EMA are likely to compete with existing units in the Singapore Wholesale Electricity Market.”
“In addition, imposing high technological barriers for newcomers to enter the market can be construed as an abuse of dominance and can be deemed as an anti-competitive behaviour,” Jafaar said, emphasising that this counters the law’s chief aim to create a competitive market framework for the industry.
Jafaar also warned that the new law would give rise to a monopoly of the electricity generation market. “Given the lack of competition, there will not be scope for resellers in the market for locally-generated electricity.”
On the flip side, Jafaar mentioned that a lack of competition might encourage resellers to tap on greener sources of electricity exported from foreign grids.
Furthermore, a provision of the energy bill repeals section 12 of the Energy Market Authority of Singapore Act or the power to borrow which allows EMA to raise capital or issue bonds to finance the construction of critical energy infrastructures.
“If interest rates were to become volatile, this can give rise to huge fluctuations in bond prices and yields. This can have an adverse effect on wholesale electricity prices,” Jafaar said.
Allowing EMA to issue commercial bonds could also expose EMA-owned or operated generation units to market forces and risks relating to the fund-raising, which, according to Jafaar, could thereby directly affect the already small electricity market.
The extensive powers given to the EMA under the bill, however, can be justified for several reasons, according to Jafaar. Singapore’s energy market is “far too small,” and EMA will allow the country to “ safeguard the reliability” of its energy generation sector.
‘Too early to tell’
Drew & Napier LLC, for their part, told Asian Power that whilst concerns raised about the bill are legitimate, it may be premature at this stage.
“The Ministry of Trade and Industry has reiterated their commitment to ensuring a competitive wholesale electricity market, and to put in place proper governance structures to ensure fair competition and mitigate any potential conflicts of interests,” Christopher Chong, Drew & Napier LLC’s head of Construction & Engineering, said.
Chong added that the bill also has positive implications, such as energising the project finance space for energy infrastructure in the country that will benefit, rather than handicap, competitors.
“As we have seen in other markets such as the offshore wind sector in Taiwan, investments will follow wherever the funds go, and the funds will go where there is future money,” he said.
It could also allow Singapore to explore “obtaining interests in major infrastructure projects overseas such as mega-solar farms in Australia, or geothermal plants in the Philippines, or hydropower plants in Laos, with a view to piping or transporting electricity into Singapore and obtaining greater security over Singapore’s energy needs through importation,” added Chong.
“This could also help spur developments in Singapore and the region, in complementary industries such as in hydrogen, battery, power transmission; and in the carbon/renewable energy credits space,” he said.
More importantly, Chong said allowing EMA to acquire, build, own, and operate power plants and infrastructure, and to fund these steps are also “extremely helpful” towards Singapore’s Clean Energy Transition.
This was also underscored by Jafaar, saying the bill can bring about much-needed change to transform Singapore’s local energy sector and reduce greenhouse gas emissions.
This is provided for by section 3 (g) of the bill which amends section 3(3) of the Electricity Act, enabling EMA to implement (whether through regulation or otherwise) policies, strategies, measures, standards or any other requirements on any matter for or connected with the reduction in emission of any greenhouse gas in the generation, transmission, import, export, or supply of electricity.
Chong said it is unlikely that EMA will take an overly aggressive approach in its implementation of strategies and measures to support Singapore’s energy transition.
Apart from the Energy Bill, Chong said laws such as the Electricity Act and Carbon Pricing Act 2018 also have measures that encourage the adoption of green technologies, standards, and practices.
Azman Jaafar
The Bill enables EMA to implement policies, strategies, measures, and standards to reduce emission of greenhouse gas in the generation, transmission, import, export, or supply of electricity
Kalehan Energy’s hybrid power plant lauded at Asian Power Awards 2021
Lower (Aşağı) Kalekoy Dam and HEPP by Kalehan Genc Enerji Uretim A.S., a Kalehan Energy company, was recognised with the Hydro Power Project of the Year - Silver award.
Lower Kalekoy project
Kalehan Energy is a group of energy companies that was founded by two of the pioneering Turkish construction companies—Cengiz Construction and Ozaltin Construction—solely for the utilisation of renewable energy. Kalehan Energy executes its projects with a vision of Turkey that is able to supply its energy demand in an environmentallyfriendly and sustainable manner using clean, renewable and domestic resources.
Lower (Aşağı) Kalekoy Dam and HEPP is the first hybrid power plant in Turkey, the largest one in Europe and was awarded the 2021 Asian Power Silver Award for Hydro Power Project of the Year.
As of 2021, Kalehan’s 1788 MW of installed capacity in operation makes Kalehan Enerji the largest renewable energy producer amongst the private sector in Turkey. The total investment cost of Lower (Aşagı) Kalekoy Project is approximately US$700m, financed by Turkish Banks with the guarantee of parent companies.
The project includes 500MWe installed capacity of hydropower and 80MW installed capacity of solar power. Whilst the main purpose of the project is to produce electricity with the approximately 1,300GWh/year energy production, it also supplies 9,450,000m3 of irrigation water per year. The civil works include a 107m-high composite type dam body composed of Asphalt Core Embankment Dam (ACED) and Roller Compacted Concrete (RCC) body. The ACED is 510m long at crest level, 107m high and 480m wide at the bottom. The embankment volume is 3.37 million m3 , and the asphalt core volume is 14,600m3. The asphalt core is 1.20m-wide at the bottom and 0.5 m-wide at the top. The RCC dam is 435m long at crest level, 110 m high and has a volume of 1.6 million m3. Additionally, 1.1 million m3 of CVC is used. The spillway is 80 m wide
and radial gate-controlled with a maximum discharge capacity of 9,247 m3/s. There are four radial gates of 19.3 m height and 14.0 m width, which make them Turkey’s highest radial gates.
In June 2020, renewable energy legislation in Turkey was revised and it was permitted to
install auxiliary resources in addition to the primary resource. With this, Kalehan decided to utilise 1,100,000m2 of unused area located downstream of the project by installing an 80MW solar power plant as the auxiliary energy resource. This solar power plant, which was completed in May 2021, is Turkey’s Largest Solar Power Plant licensed by EMRA (Energy Market Regulatory Authority).
The solar power plant was constructed downstream of the powerhouse around the tailwater area. Approximately 200,000 pieces of solar panels were installed within the project area. Installation of the solar power plant was completed in only 3.5 months despite the conditions of the COVID-19 pandemic, which is another record short duration for a solar project of this size.
The installed capacity of the powerhouse from hydro is 500MWe with four Francis type turbines: three large units with 155.49MWe and one ecological unit with 33.53MWe installed capacity. The 80MW Solar Powerplant is also connected to the powerhouse, from which energy is connected to the national grid. The project has a total of approximately 6,500m-long grouting galleries and approximately 1,000m of diversion tunnels.
The impounding created a reservoir with a surface area of 15.9km2 which required the relocation of around 90 houses in five partially-inundated villages. The land acquisition procedures were carried out in accordance with the Expropriation Law and Kalehan undertook a series of social assistance projects in the partially-inundated villages to aid the households. These social aids are comprised mainly of: • Construction of infrastructure in the new settlement areas such as water supply, electricity transmission lines and new roads; • Provision of construction machinery and construction materials for new houses free of charge, or provision of monthly rent aids to those that could not start construction of their new houses; • Construction of two mosques and a new larger elementary school; • Payment of monthly scholarships to the approximately 300 university students from the villages that are directly affected by the project.
Further to above, during the construction peak period, more than 3000 people were employed directly at the site, most of whom were from nearby villages. Currently, the planning of three more HEPP projects in Bingol and Elazig provinces as well as auxiliary resource solar projects in connection with them are underway.
