Electricity Market

The Energy Market Authority made two major mistakes that will be costly to the economy over a long term.

a) They created a massive over supply of capacity in the electricity generation market causing the wholesale electricity price to crash to a disastrous level. Some power generators, such as Hyflux, was destroyed due to the massive losses.

The new power generators that entered the market recently were protected by vesting contracts and give an guaranteed price for their supply. This is not fair to the old generators.

b) They open up the retail energy market allow for many suppliers to compete for retail customers. This adds to the marketing and administration costs. Many consumers are confused with the different types of contracts and the reliability of the suppliers.

What is an alternative approach? Here are my ideas:

a) It is a good approach for the EMA to get power generators to compete to generate power to meet the demand. Contracts can be given out to generate a fixed volume of electricity daily at the contract price over a contract period. The power generators can calculate their price and submit their tender.

These contracts can be arranged to generate up to (say) 90% of the expected demand over the peak and non-peak periods of the day.

b) It should be technically possible to store some of the electricity into high capacity batteries during the day to even out the peak and non-peak demand.

If this is not technically possible or too expensive, the power generators can be asked to spread out their production to meet the fluctuating demand.

c) To cater for the exceptional demand, a separate contract can be given out to require the production of the additional demand. The power supplier will be compensated with a minimum price even for zero production and given at the price for the actual production but the quantity is not fixed. The power generator is required to provide up to a specified quantity each day by EMA but EMA has the option to ask for a lower quanitity.

d) The EMA can appoint SP Services to provide the electricity to consumers at the average wholesale price of the electricity (which is the average of the power generating contracts) plus an acceptable margin (say 10%) to cover administration and services. There is no need to open up the market for unproductive and wasteful competition. The useful competition has already been carried out at the wholesale level by the use of power generating contracts.

I hope that the EMA will adopt this new approach to sort out the electricity market over the next few years.

 

Tan Kin Lian

 

 

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9 Responses to “Electricity Market”

  • Singapore Fooled Again n Again:

    In the first place, they allowed a commercial enterprise to bid and build a capital intensive water desalination and electricity plants knowingly that it is totally impossible to make money out of it.

    They PUB get into the act by building another water desalination plant near to it.

    Now PUB want to take this commercial water desalination plant built with investor’s money at zero dollar, a number are retirees depending these money for their old age retirement, for daily or medical expenses

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  • MarBowling:

    Ho seh liao. Whiter than white knight Tan KL has come up with Holee solutions for all parties involved:Highflux, EMA, and of course the 34k non-savvy investors. Ripe for National Day Award!

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  • Not feasible:

    Whilst it is technically feasible to store electricity in batteries it is not economically feasible.

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  • pap is clueless about value:

    As everyone knows, too many cooks in the kitchen spoil the soup.

    The same here.

    1st, all these so called suppliers do NOT generate electricity. They buy and resell.

    2nd, if these so called suppliers can buy and resell and still make a profit, it means consumers are currently paying too much for their electricity.

    3rd, if electricity generators or whoever it is can sell to the suppliers and still make a profit, why don’t they just sell directly to the consumers at the same price and do away with the middlemen waste?

    Well, clear as day. EMA under pap is clueless about value.

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  • RDB:

    Absolutely fat hopes for a purely type of parliamentarians up to chosen ministers with zero of best little or no idea of what this article suggests well. After 1959 to now status quo governance, anything better than ideals can come forth as suggested? The cock only crows “cock-a-doodle-do” by nature to announce the rising of the sun for a new day. Sg has had another type of “cock” since 1959, Any hope can be seen when it is known by the wise that stuck the desert of gainful and workable ideas for REAL progress ideas.. Why is our real talent right from the very top where “yes-man” culture since 1959 still prevails today in 1919 May??? Sounds pessimistic? Far from it unless one like many are still mental stuck in mental quicksand!

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  • GCT faking info:

    GCT privatized essential service on HIS rational that private company can manage better than the bureaucrats. The recent gangster-like electricity retail market with 30-50% off from SP rate. This showed that SP has been grossly overcharging since GCT gave the business to SP. It also suggest that GCT was bullshiting that privatization means better efficiency meaning can provide the service cheaper than Govt. It will be interesting how much extra GST collected with SP overcharging more than 30-50% over a fair deal price for essential service. All the extras do not benefits citizens but loading them with increasing cost of living with the ministers growing richer evidenced by MBT hailed to be a political.ly beneficiary Real Estate Tycoon whereas senior citizens’ hope of retirement upon CPF bursted n their CPF fast being laundered via mandatory medical insurance with threat of having to find new funds to top up. Besides these seniors trusting pap all their life find themselves further screwed with the prospect of losing the roof that GKS n LKS promised.

    The Hokkien seniors r talking with “yiao siew kia”, the cantonese with “hum ka chan” n lky policy of murder the dialects humilating chinese ancestral honor Daft generation with “tien sar de” when referring to the politically self gratified billionaires!

    The Taoist decipers r anxiously looking forward to bao yin on these tien sar de yiao siew kia hum ka chan n predict it to fall by 2019-2020?

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  • HarderTruths:

    Just create a quasi-government company and call it private. (Why not? Indian can become Malay right?)

    Then sell electricity getting discounts from parent company that undercuts the market. Or something along these lines.

    Left Hand = Right Hand. Simple. You only have the illusion of choice.

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  • LIONS:

    One thing we can take away from this.
    If the *NEW* PLAYERS can *SELL* CHEAPERER THAN THE *SUPPLIER*, think SGS HAVE BEEN OVERCHARGED ALL THESE YEAR$$$$????!!!$$$$###@@%%%!!!!!

    SO STILL TURST THE *WHATS WRONG WITH COLLECTING MORE MONEY PAPple*?

    Do you pay more for Musang King durians when you buy direct from suppliers or the retailers?

    Something is not right hete!

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  • unintended consequences:

    the white idiotic ‘authority’ roti-prata so much that unintended consequences resulted lor. the white idiots have sowed too many conditions for a lot of unintended consequences to happen lar.

    caveat hor : opinion lar.

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