Impact of Competitive Power
Markets on Power Sector
Presented by Henry Gan
Vice President, Market Operations
Agenda
• Competitive electricity market in Singapore
• Impacts on power sectors
•
Attract investment by providing pricing signals
•
Provide access to market
•
Increase efficiency and productivity of the sector
• Experience
Competitive Electricity Market in
Singapore
• Half-hourly real-time spot wholesale market
• Bid-based mandatory pool
• Security-constrained economic dispatch
• Locational marginal pricing
• Co-optimisation between energy, reserve and
regulation
• Demand side participating in the reserve
market as interruptible load
3
Competitive Electricity Market in
Singapore
• Bilateral contracts between generation companies
(gencos) and retailers
• Vesting contracts to curb the possible exercise of
market power
• Five big gencos and five retailers, and with SP
Services supplying to non-contestable consumers
• No single genco takes more than 30 percent
market share while the biggest three hold about 80
percent in total
4
Competitive Electricity Market in
Singapore
• Gencos compete to get scheduled in the
wholesale market
5
Competitive Electricity Market in
Singapore
• Retailers compete to sell electricity to larger
consumers
6
Impact on Power Sectors
Attract investment by providing pricing signals
• Market price signal drives competition
• Competition in turn mitigates price pressure from fuel oil
7
Impact on Power Sectors
Attract investment by providing pricing signals
• Investment in new plants or re-powering into more
efficient plants to match the demand growth
8
Impact on Power Sectors
Attract investment by providing pricing signals
• Investment in new plants and re-powering from ST
to CCGT in the pipeline
9
Impact on Power Sectors
Attract investment by providing pricing signals
• Divestment of three biggest gencos, with value
around $12b in total, to foreign investors in 2008
Temasek Holding
Huaneng Group
Tuas Power
Senoko Power
Lion Power
consortium
PowerSeraya
YTL Power
International
10
Impact on Power Sectors
Provide access to market
• No barrier to new entrants
11
Impact on Power Sectors
Provide access to market
• Removal of registration application fee ($5000)
since 2007
• Otherwise it might be a high upfront cost to
small producers
12
Impact on Power Sectors
Provide access to market
• Almost free of transmission congestion
• There was only one major congestion identified,
and subsequently resolved through the
enhancement of the grid
13
Impact on Power Sectors
Increase efficiency and productivity of the sector
• Increase efficiency by sourcing more efficient and
cleaner fuel – switch from fuel oil to natural gas
14
Impact on Power Sectors
Increase efficiency and productivity of the sector
• Benefit of implementation of NEMS
• A review of the performance of the NEMS between
1 January 2003 and 31 March 2005 revealed a net
benefit of $128.6 million to the economy due to the
implementation of the NEMS in January 2003
• Review was commissioned by the Energy Market
Authority and undertaken by
PricewaterhouseCoopers
15
Experience
• Reform must take place step by step based on
local conditions; learn from other successful
markets
• Need to get clear and strong support from the
government
• Industry buy-in is important: engage with and
consult industry stakeholders to deal with
challenges
16
Experience
• Have a good governance framework to allow the
market to evolve
• Regulator intervention when required
17
Thank you!
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