Singapore proposes law to boost regulatory oversight of gas and power sector

Singapore's Ministry of Trade and Industry has proposed new legislation in the parliament that will allow its energy regulator, the Energy Market Authority, to monitor the gas and electricity market and infrastructure more closely during emergencies, and take measures in the event of disruptions due to efforts to decarbonize the power sector.

While some of the steps related to centralizing gas procurement emerged in a post-Ukraine environment to bolster energy security, there have been growing instances of energy systems in countries like Japan and Australia being disrupted because energy transition can cause imbalances if not properly implemented.

Singapore introduced the Energy Transition Measures and Other Amendments Bill in the parliament on Aug. 6, which will amend the Energy Market Authority of Singapore Act, Electricity Act, and Gas Act to introduce guardrails for the electricity market, strengthen the EMA's ability to regulate the power sector and establish a fund for energy transition, the government said in a late statement.

It said the bill includes a proposal to establish the regulatory regime for centralized gas procurement that was formally announced in October 2023, and will empower the EMA to regulate the Central Gas Entity as well as introduce the requirement for power generation companies to procure gas solely from this new agency.

The CGE will aggregate gas demand from power generation companies and centralize procurement for the power sector to benefit from demand aggregation and the diversification of supply sources, and ensure gas availability, the statement said. This will have an impact on LNG procurement due to its role in Singapore's power mix.

The bill also proposes to empower the EMA to direct licensees and consumers to ration power to maintain stable supply during emergencies, as a last resort. "The 2021/2022 global energy crisis highlighted the risks of prolonged supply disruptions," the government said, adding that similar regimes are in place in countries like France and Germany.

Energy transition

The government said the EMA may need to take steps to strengthen energy security, develop a competitive market and support power sector decarbonization during energy transition, due to which the regulator will have powers to recover these additional costs "from entities and persons who benefit from these initiatives."

"The EMA will exercise these powers for cost recovery only when necessary and with due care, to ensure that energy costs are kept in check," the government said, adding that stakeholders will be consulted for such measures.

The bill also proposes regulatory powers for the EMA to direct owners of critical energy infrastructure for electricity and gas supply to provide access to other entities when it is necessary to ensure energy security and reliability.

The infrastructure-related proposals include requiring owners of key electricity and gas assets to seek the EMA's approval before repurposing these assets if they are critical to energy security, as limited availability of land earmarked for public utilities means this infrastructure might be repurposed for other uses.

Meanwhile, Singapore will set up a Future Energy Fund with an initial injection of $5 billion to support energy transition investments including the adoption of low-carbon energy sources and nascent technologies, higher capital expenditures, and exposure to significant commercial and geopolitical risks.

Power generation, primarily from natural gas, accounts for about 40% of Singapore's carbon emissions, and it needs to be decarbonized to meet the country's 2050 net-zero ambitions, the statement said.

"Developing different decarbonization pathways will change our energy landscape significantly, including in the way we regulate energy markets and develop our energy infrastructure. We will therefore need to update our regulatory regime to support decarbonization, ensure energy security and keep our power sector cost competitive," the government said.