A large number of energy providers are leaving the Singapore market after suffering millions in losses in the last two weeks due to record-high natural gas prices, which has caused power shortages in many parts of the country, according to media reports.
According to some media sources, at least two others have stopped accepting new clients because of high wholesale energy prices that retailers are finding impossible to pass to their customers. Singapore’s energy regulator Energy Market Authority (EMA) recently mentioned that they are working closely with retailers facing challenges from the increased prices that reached record levels this month. EMA also assured that there will be no disruption to their customers’ electricity supply.
Singapore is one of the few countries in Asia to fully liberalise the electricity supply market where firms sell electricity in the Singapore Wholesale Electricity Market (SWEM) every half hour, and the price is decided by the supply and demand at that particular time. The electricity is bought in bulk by the retailers and they compete to sell the same to the customers.
The last two weeks witnessed a higher volatility rate when it comes to electricity due to a rise in global liquefied natural gas (LNG) prices, higher than usual electricity demand in Singapore and lower piped natural gas supplies from Indonesia.
Retailers who do not have their own power generation assets are under tremendous strain, especially the ones who have locked-in contracts with customers at fixed prices. But, they only make up for 5 percent of the retail space.
Joo Yeow Lee, associate director of power and renewables at IHS Markit told the media, “That meant that their cost of procuring electricity from the market was in the thousand dollar range, while the retail contracts with customers are in the 170 to 200 dollar range, they were in the red for every unit of electricity sold. An estimate of the magnitude of losses over the past 2 weeks is in the low tomid-double-digit million dollar range.”