Energy (Resilience Measures and Miscellaneous Amendments) Bill

Order for Second Reading read.

2.03 pm

The Second Minister for Trade and Industry (Dr Tan See Leng): Mr Speaker, I beg to move, "That the Bill be now read a Second time".

The Energy Market Authority of Singapore (EMA) Act, Electricity Act and Gas Act underpin the energy market structure and regulatory framework we have today. The EMA Act charges EMA with the duty to create a market framework for electricity and gas, promote fair and efficient market conduct, protect the interests of consumers and the public in electricity and gas supply and promote the efficient use of energy utilities. The Electricity and Gas Acts establish the regulatory regimes to ensure competitive, secure and reliable electricity and gas supply to the industry and the public.

Yesterday, I spoke about the pre-emptive measures that EMA will be taking to safeguard Singapore’s energy security in the near term to address the recent supply crunch and volatility in global energy markets. However, energy security is not just about ensuring the robustness of our current energy supply. It is also about looking into our energy future.

With the power sector accounting for about 40% of Singapore’s carbon emissions, decarbonising the power sector is a key pillar of our efforts to combat climate change. MTI and EMA have embarked on a multi-decade programme to decarbonise our power sector. We will need to make a shift on many aspects – reducing greenhouse gas emissions from existing power plants, maximising solar deployment, working with our regional partners to develop renewable energy sources and developing new low-carbon alternatives.

We should not underestimate how challenging this journey will be. Some countries are experiencing an energy crunch because they have not provided sufficient safeguards and contingencies for their transition. This Bill will provide EMA with three important powers to secure our electricity supply over this transition.

We are proposing to update the relevant Acts in three key areas.

First, to empower EMA to acquire, build, own and/or operate power infrastructure to safeguard our energy security and reliability.

Second, to enhance the protection of critical electricity and gas infrastructure.

And third, to empower EMA to impose energy and carbon efficiency on parties licensed under the Electricity Act.

Mr Speaker, Sir, let me now elaborate on the key amendments in this Bill.

Safeguarding energy security and reliability – first, I will speak on our amendments to ensure that we have a safe, secure and reliable supply of electricity which is critical to Singapore’s survival.

Today, we rely on the private sector to provide sufficient generation capacity and the critical infrastructure needed for energy security and system stability. This ensures market discipline and cost effectiveness. However, the global energy transition introduces various risks and uncertainties in energy markets. For example, it is unclear when new energy solutions, such as hydrogen and carbon capture, utilisation and storage may become cost-viable for large-scale deployment. It is also unclear how natural gas may feature in the future global energy mix.

These uncertainties may inhibit private investments. For example, generation companies may not be willing to invest in new generation capacity to replace older retiring generation units. They may also not be willing to invest in new technologies that incorporate cleaner fuel. Banks may be increasingly reluctant to finance generation projects which are needed but are not based on renewable energy.

To safeguard energy reliability and security during the energy transition, we must give EMA the option to step in and provide the critical infrastructure and services needed to ensure the proper functioning of the energy sector.

The first key amendment, therefore, amends section 3 of the Electricity Act and the Second Schedule of the EMA Act, to empower and enable EMA to acquire, build, own and/or operate critical infrastructure. Examples of such infrastructure would be generating units, energy storage solutions and transmission infrastructure, including those that may be required for cross-border electricity trading.

This will allow EMA to provide the required critical infrastructure when there is a need to do so. One example is the Open Cycle Gas Turbines (OCGT). OCGTs are quick response units that can be brought online quickly to augment any shortfall in generation capacity, such as when there are unplanned outages among other generation units. These quick response units are necessary for the security and reliability of our electricity system. However, there is little private sector interest to build these units as they are less competitive compared to the Combined Cycle Gas Turbines. The existing OCGTs in Singapore are more than 30 years old and they are long overdue for replacement. EMA could step in to build new OCGTs.

Where needed, EMA may directly operate the critical infrastructure or set up a subsidiary to do so. Should EMA or its subsidiary operate the critical infrastructure, operational Key Performance Indicators, or KPIs, similar to the regulatory requirements that licensees are subjected to today, will be imposed, in lieu of licensing requirements. The Bill also expands EMA’s borrowing powers in the EMA Act to allow EMA to issue bonds, in addition to borrowing through commercial or Government loans, to finance the construction of these critical infrastructure.

Mr Speaker, in moving this amendment, I am mindful that the powers to acquire, build, own and/or operate critical infrastructure are broad and can affect the commercial considerations of the stakeholders in the power sector. In EMA’s industry consultations, power generation companies were concerned that the units that would be owned and operated by EMA would compete with their units in the wholesale electricity market and depress wholesale electricity prices. There were also concerns that EMA would act as both regulator and owner/operator of the generation unit. These are valid considerations. Allow me to address them.

First, this amendment is worded broadly to provide EMA with the flexibility to react to the wide range of scenarios which may undermine the security, stability and reliability of our energy sector. Our preference is for the private sector to build, own and operate the electricity infrastructure. I would like to assure this House that before exercising this power, EMA would have explored alternative solutions to provide the critical infrastructure that is needed.

Second, EMA will be putting in place safeguards to ensure that they do not compete unfairly against the private generation companies. For example, EMA may set up a separate subsidiary to own and operate a generating unit and will put in place proper procedures and governance structures to mitigate any conflict of interests.

The second key amendment updates the Electricity Act and the Gas Act to make it an offence to damage any infrastructure housing or intended to house any transmission electricity cables, gas transmission pipeline or submarine gas pipeline in the territorial waters of Singapore. This is needed to enhance protection of critical electricity and gas infrastructure.

Currently, sections 80 and 85 of the Electricity Act, and sections 32, 32A and 32B of the Gas Act, only penalise offenders who damage the actual cables and pipelines. However, as the infrastructure housing these cables are an important part of the transmission network, EMA will be expanding the scope of the offences in these sections to cover such protective infrastructure as well. The offences carry the same penalties as those for damaging the actual cables and pipelines.

Moving on to the third amendment, the third key amendment empowers EMA to enhance the carbon efficiency of parties licensed under the Electricity Act. Currently, around 95% of our electricity is generated using natural gas, which is the cleanest form of fossil fuel. Even as we ramp up various sources of low carbon energy, such as solar energy and tap on regional power grids for low carbon energy, natural gas will remain an important source of energy for us over the next few decades. To reduce the carbon footprint of electricity generation, it is important that we gradually shift towards cleaner and more efficient modes of power generation.

The Bill expands EMA's regulatory functions under the Electricity Act to include implementing policies and strategies connected with the reduction of greenhouse gas emissions in the import, export, generation, transmission or supply of electricity. Under clause 3(k), these policies and strategies may be imposed on licensees through Codes of Practices.

This move towards a reduction of greenhouse gas emissions is part of a larger effort to shape a more energy- and carbon-efficient power sector. Since 2018, EMA has rolled out incentive schemes, such as the Energy Efficiency Grant for Power Generation Companies, to encourage power generation companies to improve energy efficiency. To date, more than half of the larger generation companies have tapped on the grant to make improvements to their generation units. However, as low carbon technology matures and becomes more cost-competitive, it is timely and necessary for the sector to move beyond incentives and grants and to empower EMA to regulate on this front.

EMA will work with the industry to develop reasonable standards and provide a transition period for existing generation units as needed.

This amendment will also complement ongoing economy-wide initiatives to lower carbon emissions, such as carbon taxes, to transition the power sector towards low carbon generation sources.

The Bill also makes several miscellaneous amendments to the Electricity, Gas and EMA Acts and related amendments to the District Cooling Act. These include streamlining the licence application and extension process for all electricity and gas licensees, clarifying the prudential obligations of specified licensees in the event of an insolvency situation, clarifying inspection obligations in connection with gas installations and updating key terms and definitions in the Electricity Act.

Mr Speaker, Sir, the power sector is at an important point in its development. We have made ambitious commitments to reduce our carbon emissions and combat climate change, but the developments unfolding around the world also serve as a stark reminder of the complexity of this transition. As energy forms the bedrock of our economy and our society, it is especially important for Singapore to manage the transition well and seamlessly.

In finalising these amendments, MTI and EMA had sought feedback from industry stakeholders and members of the public through a public consultation exercise earlier this year. MTI and EMA have carefully considered all feedback received and incorporated them where relevant.

This Bill is necessary to ensure that EMA has the necessary levers to navigate the energy transition, while ensuring that our energy supply remains secure and reliable. My Ministry will also continue to monitor and study further enhancements to legislation to facilitate a smoother energy transition while safeguarding Singapore's energy security, reliability and affordability. Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Liang Eng Hwa.

2.20 pm

Mr Liang Eng Hwa (Bukit Panjang): Mr Speaker, Sir, I will speak on two key areas in this Bill that sets out the powers. One, for EMA to safeguard energy security; and two, to enable EMA to implement policies to reduce carbon emissions.

Firstly, on energy security. Sir, this is the most interesting time to debate on energy security and energy resilience. Energy prices are surging in the global markets due to a combination of factors: supply crunch, weather, soaring demand and geopolitical tensions and so on.

And this would soon translate into higher electricity prices to consumers. It does not help that a number of the electricity retailers, also impacted by the recent price volatility and have exited at this time, leaving thousands of households who have subscribed to the fixed plan exposed to the impending hike in electricity prices.

Adding to the uncertainties, the imported piped natural gas from Indonesia is also disrupted, leading to EMA taking the extraordinary pre-emptive steps to establish standby fuel facilities where power generation companies or gencos can draw upon.

Credits to MTI and EMA for also establishing the liquified natural gas (LNG) infrastructure about a decade ago to serve as a back-up source to the piped gas supply. This is most critical as, today, 95% of our electricity is generated from natural gas and, by far, still the cleanest fossil fuel to date.

Beyond the current energy woes, the longer-term challenge for Singapore would be how we can repower ourselves as almost all the existing natural gas-powered plants will reach the end of their shelf life and would be retired in the next one to two decades. What would be the new mix of energy sources in the future that will be both efficient and resilient and also meet our sustainability goals?

It is a key strategic policy decision the Government has to make and to implement. But this major transition to a more efficient, resilient and sustainable energy architecture for Singapore also requires new executive powers to effect massive industry changes and restructuring.

Among others, this Bill empowers EMA to directly build, acquire and manage these essential electricity infrastructures, if need be, to ensure the resilience and security of our power supply. It also enables EMA to issue licences, import of electricity and issue bonds to finance these critical facilities.

Sir, I support giving EMA these powers to ensure that the country will be reliably powered. This is of paramount importance. In situations of crisis or significant market disruption, EMA may require this delegation of authority to take necessary decisive actions. I will go further to submit that critical infrastructures like power generation which has a direct bearing on our security, economy and the well-being of our people should be a nationalised company or maybe even Temasek-linked companies.

This would ensure that the power generation companies would be operated and invested with our long-term national interest in mind. This is especially so for a small island economy like Singapore, where we lack the scale. Power generation infrastructures do have their useful lifespan and obsolescence.

It requires continuous long-term investments to renew, repower and invest in new capacities to meet our growth demands. There is now also the added sustainability emphasis as well as the need for further resiliency to be built into our future energy supply. Whilst doing all the above, we also want to ensure that electricity prices stay affordable to consumers and to businesses.

All these requirements and often competing needs may not be best served by commercially-run business enterprises. Having these infrastructures largely owned and operated by, say, foreign commercial entities, may leave us exposed to potential disruptions should the parent head offices or other subsidiaries of these companies run into problems or that they have no plans to reinvest and merely want to sit out the legacy investment till it is fully depreciated.

Of course, the Government can regulate to require the gencos to close the line, but we know that too much of regulations and directives can actually kill the enterprising spirit and defeat the purpose.

The other steep challenge faced by power generation companies is the ability of the company to fund the long-term capital expenditure needed to renew and to grow the capacity. Not all companies are able to raise long-term capital which can stretch more than 10 years or 20 years, at a reasonable cost. The commercial returns from the generators may not be adequate to service such long-term debts which also come with project risks and, therefore, higher risk premiums.

Hence, I am supportive of the new provision in this amendment that allows EMA to raise capital or issue bonds to finance the construction of these projects where necessary.

Sir, next, on reducing greenhouse gas emissions as provided in this Bill.

This is needed to facilitate the decarbonisation of our gencos and, importantly, it signals the way forward in how we generate electricity. Besides enabling EMA to push for carbon-efficient technologies through this Bill, there are also the upcoming carbon taxes to incentivise the reduction of carbon emissions.

In recent years, we have seen more forward-looking businesses incorporating sustainability into their corporate agenda. Hence, rather than use the powers derived from this Bill to institute broad-based measures, I would suggest that EMA can look at more targeted measures to move the sector towards lower emissions.

With the progressive build-up of the four supply "switches" and the diversification of the various energy sources, the regulations and the development of the sector would also need a more differentiated approach.

Sir, as this Bill is also about resilience, can I use this opportunity to seek a progress update from the Minister on the alternative sources of energy that EMA is developing? In particular, whether hydrogen, which has been quite talked about, can be a viable source or game changer for Singapore energy supply; and also, what would be the likely timeline?

Sir, my final point is on the transition risks as we journey towards the new landscape. As EMA embarks on this multi-decade programme to transit to a low-carbon, four-supply switches setting, it would, understandably, change the overall market dynamics of the incumbent operators.

Some of these new plans may directly or indirectly impact the operations and financial performances of these players. How would EMA ensure that this transition can be smoothly carried out with no or minimal disruptions to our energy supply? Also, what is the estimated infrastructure cost to realise our new energy vision?

In this Bill, there is also an amendment to clarify the ability to draw down on electricity retailers' deposits to offset outstanding settlement payments to protect consumers' interest.

This amendment is necessary in light of the disruptions in the open electricity market that we saw. So, I urge EMA to look into further measures to mitigate these counterparty risks; including allowing for the novation of some of these in-the-money fuel hedging positions from the retailers who may have abruptly exited the market, to allow this novation of this contract, this position that they hedged on, to come to the new retailers the consumers choose, for example, SP Services, so that consumers' interests can be safeguarded. Sir, notwithstanding that, I support the Bill.

2.29 pm

Mr Gerald Giam Yean Song (Aljunied): Mr Speaker, the recent natural gas supply disruptions and consequential increase in electricity prices have brought to the fore the importance of strengthening our nation's energy resilience. To date, five electricity retailers will be dimming their lights and others have stopped accepting new customers. This has impacted over 150,000 customers, who will most likely have to pay more for electricity in the coming months.

This may be just the tip of the iceberg of people affected by increasing electricity prices. About 714,000 households which had not previously switched to a retailer in the open electricity market are paying a regulated electricity tariff, which has increased by 32% since last September. According to the answer to a Parliamentary Question (PQ) I asked in January, 79% of HDB 1- and 2-room households and 63% of 3-roomers are paying the regulated tariff compared to just 40% of those living in landed properties.

This indicates that lower-income Singaporeans may be disproportionately impacted by higher electricity prices.

Other households which have locked in lower rates in their retail contracts will soon face their day of reckoning when they renew their contracts, as the new rates will reflect the higher prevailing electricity prices.

This electricity price hike could not have come at a worse time for many households. Our economy has yet to fully recover from the pandemic-induced downturn and many Singaporeans are still struggling with job losses, salary reductions and disrupted careers. Many are working and studying from home, resulting in higher household electricity usage.

I would like to reiterate the request I made yesterday for lower-income households to be given a one-off special additional electricity rebate to assist lower-income households during this difficult period. This should be on top of existing U-Save rebates, which were calculated before the current electricity price increases occurred. I appreciate Minister Tan See Leng's reply yesterday that he is exploring with MOF further means to help and is working out the details with them.

The current electricity price increase can be traced to disruptions in the supply of natural gas to Singapore and higher demand globally. In the last few months, the curtailment of the flow of gas from Indonesia's West Natuna gas field and the lower landing pressure of gas supplied from South Sumatra has severely impacted a vital source of our power generation needs.

The Energy (Resilience Measures and Miscellaneous Amendments) Bill that is before the House today is timely, as it seeks to better safeguard Singapore's energy security. It enables the Energy Market Authority (EMA) to construct, acquire, manage and protect electricity infrastructure and authorises EMA to implement policies to reduce the emission of greenhouse gases in the generation of electricity.

It is comforting to know that EMA will be able to step in to build, own and operate power generation plants, if needed. However, in practice, will this be done only as a last resort, for example, if existing gencos fail in their roles? Or is EMA already making plans to directly build and operate critical electricity infrastructure like undersea cables to import electricity from overseas?

I note the Minister just said in his Second Reading speech that the Government's preference is for the private sector to build, own and operate electricity infrastructure and that, before exercising this power, EMA will explore the other options available. The Minister has also assured the House that EMA will put in place Government structures to mitigate conflicts of interest. Can he elaborate on what these Government structures will be to ensure fair competition in the electricity market and mitigate conflicts of interest?

The Government has announced plans to embark on a multi-decade programme to transition our electricity generation to low-carbon generation sources through four supply switches. These are: first, by increasing energy efficiency of natural gas power plants; second, by accelerating solar deployment; third, by tapping on regional power grids for low-carbon electricity imports; and, fourth, by developing low-carbon solutions, such as hydrogen and carbon capture utilisation and storage (CCUS).

About 95% of our electricity is generated from imported natural gas. This is unusually high compared to other countries and it carries concentration risks. Recently, the tiny European nation of Moldova, which gets almost all its gas from Russia, had to declare a state of emergency over a gas shortage. The Russian state gas giant, Gazprom, hiked its prices four-fold, then reduced supply when Moldova refused to pay. Moscow has been accused of weaponising its gas monopoly in Moldova, which recently elected a pro-Western president and parliament.

In Singapore, around 70% of our natural gas is piped from Malaysia and Indonesia. Will we face similar threats should relations with our neighbours get rocky, as they do from time to time? In fact, it may already be happening, even in the absence of diplomatic problems.

In February 2020, the Indonesian government announced that it intends to halt gas exports to Singapore by 2023, when one of our two gas pipeline contracts expires. This ought to set off alarm bells, given our heavy reliance on Indonesian piped natural gas.

Over the years, Singapore has worked hard to diversify our national water taps away from an over-reliance on imported water from Malaysia to ensure a more robust and sustainable water supply. We need to do the same for our energy supply switches. How will the Government diversify our current 95% dependence on imported natural gas for power generation? Clearly, we cannot afford to shift back to dirty fuels like coal and oil, which, in any case, also need to be imported. Therefore, our future lies in greater reliance on renewable energy.

The third supply switch envisions tapping on regional power grids for clean energy imports. Singapore is planning to import up to four gigawatts of low-carbon electricity by 2035, which is expected to make up around 30% of Singapore's electricity supply. However, the proposed import of electricity from solar farms in Australia's Northern Territory will be via undersea cables running through Indonesian waters. This could provide the same political risks as transnational gas pipelines. The Indonesian government had to approve the undersea cable route last September and it is unclear how long this approval will be for. On 22 October, Malaysia announced that it will not allow renewable energy exports to Singapore. Their former Prime Minister, Tun Dr Mahathir Mohamad, questioned why non-renewable energy exports to Singapore were allowed.

Australian support for the export of renewable energy to Singapore may also wane with political winds. Some NUS researchers recently warned that the Australian government may suffer some pushback from its powerful coal lobby.

On the flip side, even countries which support the development of renewables, might prefer to use that clean energy domestically to meet their own net zero pledges.

With Singapore potentially sandwiched between competing interests that we have no control over, how will the Government manage the political risks associated with importing 30% of our electricity in the future?

With both natural gas and electricity imports carrying risks, we need to strengthen our indigenous capabilities to produce clean energy.

Our geography and highly urban landscape limit our renewable energy options. We do not have wide open deserts to set up large solar farms, but we have plenty of building rooftops and intense tropical sunlight. Solar power, however, tends to be intermittent. When the sun stops shining, the electrons also stop flowing.

Fortunately, battery technology has improved tremendously in recent years, driven by the growth in electric cars. At the same time, the price of lithium-ion batteries is expected to fall 45% between 2018 and 2030. Better energy storage systems will smoothen out the imbalances between supply of and demand for solar power. EMA has said it is targeting a two-gigawatt peak of solar energy by 2030, Yet, even if this target is met, solar will supply only around 3% of our total energy demand. Is this really the best we can achieve with solar?

Are we planning for a large-scale deployment of solar panels on building rooftops, reservoirs and even offshore islands? Are we providing companies sufficient incentives to boost adoption of energy storage systems that are paired with solar installations?

Besides solar energy, have we done a deep dive to explore other renewables like tidal energy, geothermal energy and offshore wind farms? We do not have much time to diversify our energy sources away from natural gas. As countries shut down their pollutive coal-fired power plants, natural gas will increasingly be used as a transition fuel. This will reduce the supply available to us and raise its price.

The Government, industry and our people need to double down to innovate and come up with more clean energy solutions to diversify our energy mix, strengthen our energy resilience and meet our current climate change pledges. Singapore's energy transition must be accelerated but managed well to ensure that our lights stay on and our electricity bills remain affordable. Sir, I support the Bill.

Mr Speaker: Mr Melvin Yong.

2.40 pm

Mr Melvin Yong Yik Chye (Radin Mas): Mr Speaker, I stand in support of the Bill, which seeks to safeguard our energy security, enhance the protection of critical energy infrastructure and reduce our emission of greenhouse gases.

Sir, before I begin, I would like to declare my interest as the President of the Consumers Association of Singapore (CASE).

Sir, the Bill proposes, amongst other things, to take significant steps to reduce Singapore’s carbon footprint. This is a timely move, as countries review and renew their climate change commitments in light of the mounting evidence of the widespread damage that climate change will have on our future generations if no action is taken.

According to various scientific studies, the main driver of modern climate change comes from the burning of fossil fuels, which releases greenhouse gases that gets trapped in our atmosphere, causing the Earth to heat up. I, therefore, fully support the proposed changes to the Electricity Act, which will allow EMA to set greenhouse gas emissions standards. Over time, this will be an important lever for the Government to force power generation companies to use more energy-efficient technologies.

This legislative lever is especially important, given Singapore’s ambitious push, under the Singapore Green Plan, to phase out internal combustion engine vehicles by 2040 and to have all vehicles run on cleaner energy, such as electric vehicles. But even if electric vehicles have no tailpipe emissions, they can still leave a significant carbon footprint if the source of our energy generation produces large amounts of greenhouse gases. Empowering EMA to set emissions standards for power generation companies is, therefore, vital for us to realise our international climate change commitments and to truly go green.

I would like to ask for an update on the projects funded under the Ministry’s first Genco Energy Efficiency Grant Call, which was awarded back in 2020. It has been just over a year since the EMA awarded $23 million in grants to Senoko Energy, Tuas Power Generation and YTL PowerSeraya. Have these three companies seen their energy efficiency projects bear fruit? How much does the Government expect to invest for the second Genco Energy Efficiency Grant Call, which is currently open for submission?

Mr Speaker, more than 95% of our electricity is generated from imported natural gas. This puts us at a severe disadvantage during global energy crises, such as what we are facing today, which has caused wholesale electricity prices to spike.

The Bill’s proposal to empower EMA to acquire, build, own and operate critical power sector infrastructure, if there is a failure in the private market, can be seen, therefore, as an important safeguard for our nation’s energy self-sufficiency should such global conditions happen again in the future.

However, once the Bill is passed, EMA would have the power to act as both regulator and owner of generation companies. EMA would then be able to compete in the Singapore Wholesale Electricity Market and could, through the sheer financial might of the Government, dictate wholesale electricity prices. I am, therefore, glad that the Minister has assured in his Second Reading speech earlier that the appropriate safeguards and processes will be put in place to ensure fair market competition and prevent conflicts of interest from arising.

Mr Speaker, the recent spike in wholesale energy prices has resulted in some retailers in the Open Electricity Market having to exit the consumer retail market. Minister Tan See Leng spoke at length about this during yesterday’s Sitting, in response to the Parliamentary Questions filed by me and various other Members of this House.

According to the Minister, the exit of these retailers has affected about a tenth of household consumers in the Open Electricity Market. We cannot underestimate the negative impact that this has had on affected consumers. Their contracts have been cut short and they will need to migrate to a new retailer that offers more expensive electricity plans, or have their accounts transferred back to SP Group and pay for their electricity at the regulated tariffs.

The prolonged telecommuting work arrangements due to COVID-19 has also meant an increase in the average household electricity consumption during this period. Taken together, affected consumers face a double whammy in terms of having to pay more due to higher prices and an increase in energy consumption.

Consumers have the most to lose when an electricity retailer decides to call it a day. That is why CASE had, in 2018, worked closely with EMA to embed consumer protection measures into the Open Electricity Market. Consumers affected by the closures of their energy retailers will have their security deposits refunded. They can also choose to terminate their contracts early with exiting retailers without any termination fees, before their accounts are transferred to the SP Group. CASE had also worked closely with EMA on consumer awareness roadshows to highlight key information, such as their consumer rights if their chosen energy retailer closes.

Despite these safeguards, some consumers remain unhappy at having to suddenly pay more due to the business failures of the electricity retailers. Their unhappiness is understandable. While we cannot turn back time to shore up the poor business fundamentals of the exiting retailers, what we can do is to learn from this episode and prevent a similar exodus from happening in the future.

Markets often operate in a cycle and periods of volatile energy prices will happen again. What are lessons that the Ministry has learnt from this episode and how does the Ministry intend to prevent another exit of multiple electricity retailers when volatility arises once again? Does the Ministry plan to review the mandatory hedging position by electricity retailers, particularly those who do not possess any electricity generation capabilities, and require them to hedge more aggressively so that we can avoid a repeat of an exodus of retailers when the wholesale electricity market turns volatile again?

Sir, the move to fully liberalise the electricity retail market in 2018 was a game changer that allowed consumers to enjoy significant savings and the ability to choose electricity plans that fit their lifestyles. Since its launch, retailers have been able to provide prices that are lower than the regulated tariff offered by SP Group. But this may not necessarily always be the case. Just like in any market, prices can rise and fall. If the current global energy crisis persists, market prices may soon rise above the regulated tariff. I hope that this exodus of retailers will not end up becoming a false dawn for the Open Electricity Market and I hope that the Government can do more to ensure market stability, while ensuring that consumers continue to enjoy attractive electricity prices and more competition in the market.

Mr Speaker, in conclusion, the Bill is a timely move that paves the way for Singapore to act on our climate change commitments. But as we pursue our path towards energy self-sufficiency, we must recognise that we will continue to be a price-taker in both the short and the medium term. We should, therefore, do more to protect our consumers, who have the most to lose in a volatile energy market. With that, I support the Bill.

Mr Speaker: Mr Abdul Samad.

2.49 pm

Mr Abdul Samad (Nominated Member): Mr Speaker, Sir, this Bill is one that is close to my heart as I have been in this industry, alongside the workers, since 1995. I started as a Technical Officer in a power generation plant and, thereafter, transited to providing consultancy and advice to Government agencies, consultants and contractors in protecting our power cables and gas pipes during the course of construction works. The works can span from simple roadside digging to major projects like commercial buildings, even deep excavation tunnelling works. I enjoy and take pride in doing my job for one reason: ensuring that our energy network remains uninterrupted, secure, reliable and efficient at all times.

Sir, I would like to touch on two parts of this Bill, namely, about allowing authority to build its own capacity of new generation plants for security and reliability; thereafter, not forgetting the importance of driving towards zero carbon emissions through energy efficiency enhancements, solar deployment, use of regional power grids for low-carbon electricity imports and the adoption of new technology. For the information of the House, I am the General Secretary of the Union of Power Gas Employees (UPAGE), which currently serves and represents workers in this industry. Any change to this business model will affect our workers, either directly or indirectly.

Workers in this industry have gone through major changes since 1995, starting with the corporatisation of PUB’s electricity and gas departments into Singapore Power, currently known as SP Group. Union leaders back then faced challenges from workers who were worried about the security of their rice bowl once they were no longer in the Government sector. Moving forward to the late 2000s when our big generation companies were sold to foreign investors, many workers became more agitated and anxious. The founding UPAGE leaders had to walk the ground to hear them out and give assurance that their concerns have been heard at the highest level. This was possible because our leaders back then were closely engaged by Government leaders on the rationale for the changes in the energy business landscape. That laid the foundation for the strong bipartite relationship between UPAGE and the Energy Market Authority (EMA) which exists until today.

From my earlier exchanges with management of generation companies, they have relayed to me some observations and concerns with this Bill. The first of which is the longevity of the power generation companies or gencos in Singapore and the long-term employment viability for their employees. These companies currently employ more than 1,000 workers and changes to the Energy (Resilience Measures and Miscellaneous Amendments) Bill will have an impact on them.

A fundamental principle of the electricity market has been the segregation of contestable and non-contestable business segments with EMA as the regulator to oversee the industry. A vibrant, balanced and competitive market is essential to encourage continued investment and the renewal of old assets and to provide adequate drivers to adopt new technology and improve efficiency. This would translate to the training and upskilling of the genco workers, ensuring that their long-term employment can create exciting opportunities for new entrants.

This proposed Bill provides the ability for EMA, or an entity wholly owned and/or controlled by EMA, to finance, build, own and operate a power plant. The industry players are concerned that a direct intervention by EMA in the Singapore power market may signal a market failure to the investors that have already gone through a sustained period of losses. Gencos, particularly those which are foreign-owned, are likely to regard the regulatory risk in the Singapore market as high and will be reluctant to invest in new capacity or repowering of their ageing units.

In light of this, the appeal is for EMA to observe the power market for a few more years to understand if the recovery is sustained and whether private developers are investing in new capacity or repowering their ageing units. Alternatively, if the current business model is deemed unsustainable, maybe EMA could consider revamping the market to one that is re-nationalised and carefully planned, taking a more holistic consideration of Singapore’s needs to have secure and sustainable energy supplies supported by home-grown talent.

Notwithstanding the above concerns, the industry players are in support of the Government’s intention to reduce carbon emissions through a long-term, low-emissions development strategy. They concur that this critical objective can be achieved via a multi-pronged approach, including energy efficiency enhancements, increased solar deployment, use of regional power grids for low-carbon electricity imports and the adoption of new technology.

This will then bring me to the next part of my speech on increased attention for climate change and the journey towards embarking on energy transitions and, closest to my heart, efforts to train and prepare our workforce for the future.

Many generation companies across the globe are only now shifting from coal and oil to natural gas and renewable energy sources like wind, solar and hydropower. Singapore, as a small city state with little natural resources and renewable energy options, has always had to rely on fuel imports to meet our energy demand. We had, in the early 2000s, made the shift from oil to natural gas to power our electricity generators. This was a big shift for us as a nation, as natural gas is the cleanest burning fossil fuel. The adoption of natural gas has helped Singapore manage our carbon emissions since the switch.

Sir, myself, together with my fellow UPAGE leaders, have a close working relationship with EMA on issues that relate to our energy story, as we are the Union that represents the workers in this industry. EMA has never failed to provide the necessary support and guidance on matters that relate to the business outlook that will directly affect the workforce both in the current moment and also preparing for the future. It is at such meetings that UPAGE was informed of this transition journey that will be undertaken by the Government to decarbonise the power grid while meeting our economy's and social energy demand via tapping on four switches, or energy supply sources, as was also announced at the 2019 Singapore International Energy Week.

In making the big shifts in energy supply, I would like to encourage industry players, especially those in the clean energy sector, to consider leveraging this transition to tap on new opportunities. I strongly encourage our Singaporeans, not just those in the power sector today, but also those who are still studying or considering a career transition, to consider joining the new and exciting opportunities in the green economy. NTUC and our Employment and Employability Institute are contributing to this national effort by working with the Sustainable Energy Association of Singapore (SEAS) to increase workforce supply and redesign jobs in the solar industry to meet future demand.

Closer to me, I would like to share I am blessed and grateful to be an employee of SP Group as we always believe in training our workers not just for increasing the productivity level, but also learning new skills for the future. With this energy transition in mind, UPAGE and SP Group management have started on a journey called Fusion, which stands for Future Skills in Everyone, back in January 2018. Since then, courses and programmes, such as Introduction to Future Grid, Energy Efficiency, requirements for installation and commissioning of Grid-Tied Photovoltaic systems, energy storage systems and more, will be introduced as we progress. Through this, more than 1,600 of the workers have attended close to more than 20,260 hours of training.

Sir, I believe it is important to share the efforts by the power and energy sector workforce, not just because I am one of them, but, more so, to remind ourselves that they have ensured the safe and secure generation, transmission and distribution of electricity from the power stations and the import, production and distribution of gas, from the gas plants and gasworks to consumers like us.

While the Bill talks about the change of energy source security and reliability, we must not forget the manner it is brought to businesses and consumers like us. During the circuit breaker last year, this group of workers were either out in the hot sun or humid conditions inside the plants and stations to ensure that businesses and consumers can have a continuous and uninterrupted supply. I hope we do not just feel upset when the tariff rates go up, but do also bear in mind the efforts of the workers that ensure our electricity and gas reach us at home.

To all my fellow power, energy and gas sector workers, thanks for your tireless effort in this challenging time so that our fellow citizens can enjoy watching their favourite movies and cooking good and healthy food in the luxury of their homes.

Before I conclude my speech, we note that the energy transition to cleaner energy sources is but one way that we can reduce our impact on the environment. All Singaporeans can do our part to reduce our energy use, for example, by adopting more energy-efficient appliances and solutions.

Sir, notwithstanding the concerns I have raised, I would like to record my strong support for this Bill to ensure our country's energy security and reliability.

3.01 pm

Mr Desmond Choo (Tampines): Mr Speaker, Sir, I stand in support of the Bill. The world is gripped by an energy crisis. The demand for natural gas has remained at multi-year highs with no clear signs of easing; the same applies for fossil fuels. With 95% of Singapore's electricity generated by natural gas, our electricity market is bearing the full brunt of this energy crunch. Electricity prices were highly volatile. The Uniform Singapore Energy Price (USEP) recorded extremely volatile intra-day figures in the past month. This has also forced several electricity retailers out of the Open Electricity Market (OEM), so it is quite timely for us to discuss this Bill of resilience.

This Bill allows the Ministry and EMA to robustly safeguard Singapore's energy security and resilience. The amendments effect this in two ways.

First, to enable EMA to acquire, build, own and/or operate critical infrastructure. Second, to empower EMA to require licensees to reduce Greenhouse Gas (GHG) emissions. I will address these in turn.

Mr Speaker, high capex and the great energy transition have diminished investors' appetite to invest in gencos, at least in the short term. Therefore, EMA must be able to address failures in the private electricity market. The proposed amendment to empower EMA to acquire, build and own this critical infrastructure will ensure that this energy supply remains resilient.

However, it is not without concerns. There are concerns that the EMA would potentially act both as a regulator and owner or operator of generation units. The Ministry has reiterated its commitment to ensure a competitive wholesale electricity market. I seek the Minister's clarification on the proper governance structures to mitigate against potential conflicts of interest.

Next, on empowering EMA to impose requirements to reduce GHG emissions. I have spoken in this House on how critical it is to curb climate change on a few occasions. We must reduce GHG emissions to the greatest extent possible. There is no time to waste. Emissions in Singapore are largely dominated by the energy sector. It accounts for 38% of the nation's carbon emissions in 2018. Thus, to help in combatting climate change, we must lower carbon emissions by promoting energy efficiency within the energy sector.

The proposed amendment enables EMA, with more tools, to reduce GHG emissions. For example, it can introduce policies to decarbonise electricity generation and mandate the uptake of cleaner technologies.

First, could the Ministry clarify if EMA's efforts to reduce GHG emissions would necessarily translate into higher business costs for companies? If so, what are the scale and extent? And, in turn, does it also mean higher electricity tariffs for consumers? If so, what is the longer-term strategy to soften this impact for consumers and businesses, especially the SMEs and lower-income households?

Second, the existing Energy Efficiency Grant for Power Generation Companies or gencos disburses grants of up to 50% of qualifying costs for gencos to invest in energy-efficient technologies. In 2020, three gencos were awarded a total of $23 million for energy-efficient projects. These projects would translate into taking about 9,200 vehicles off the roads annually.

However, my concern is that gencos might be constrained by the new policies while grappling with high price volatility. High price volatility makes it difficult for them to forecast revenue streams and apportion funds to adopt greener technology. The quantum of the grant might be insufficient to beef up the genco's appetite to do so.

We need to further incentivise and support gencos to switch to greener technologies. Clearly, increasing the quantum of the grant is one way but not the only one. We can also introduce flexibility tied to energy price trends. This can allow the companies to plan and manage their cashflows better.

Next, on the OEM, it was introduced in 2018 and many consumers benefited from competitive pricing and innovative offers. However, the price of natural gas in 2018 was half of what it is today. Analysts have suggested that the recent exits from the OEM can be attributed to the high number of retailers in the OEM market. This makes them less able to reap economies of scale. It also makes it more difficult for retailers to build up financial reserves, reducing their ability to weather negative market conditions.

The global energy crunch will persist for some time. The volatility will only be worsened by the shifting of investment to renewables and cleaner energy sources. Could the Ministry share on its plans to support these OEMs while developing a more sustainable longer-term framework? Perhaps, there is scope to reduce the number of approved retailers to avoid disruptions to consumers.

Mr Speaker, Sir, the Bill safeguards Singapore's energy security and resilience. This is done alongside our pursuit of combatting climate change by reducing emissions in the energy sector. Yet, there are difficult trade-offs, not the least in terms of higher costs for businesses and consumers. We must develop plans to combat climate change sustainably. Notwithstanding my clarifications and suggestions above, Mr Speaker, I support the Bill.

3.08 pm

Ms Janet Ang (Nominated Member): Thank you, Mr Speaker, for the privilege to join in the debate on the subject of the Energy (Resilience Measures and Miscellaneous Amendments) Bill. Singapore's energy network, like our water network, is a critical national infrastructure. I rise in support of the Bill.

Climate change is a global emergency and a threat to mankind. This House has committed that the Government, in partnership with the private sector, civil society and the people of Singapore, will deepen and accelerate efforts to mitigate and adapt to climate change and to embrace sustainability in the development of Singapore. The multi-Ministry Singapore Green Plan 2030, which was unveiled at Budget 2021, is an exciting vision and a rallying cry for the whole of Singapore to work towards becoming a sustainable smart nation. And Singapore has made strong commitments to reduce carbon emissions for a more sustainable future with water, food and energy being three critical pillars of our Singapore Green Plan 2030.

The energy sector, as the Minister has said, has a key part to play as it accounts for about 40% of Singapore's carbon emissions. The Minister has also shared in his speech that Singapore will be embarking on a multi-decade programme to transition our electricity generation to low carbon generation sources through four supply "switches". First, by enhancing the energy efficiency of natural gas power plants; second, by accelerating solar deployment; third, by tapping on regional power grids for low-carbon electricity imports; and fourth, by developing low-carbon solutions, such as hydrogen and carbon capture utilisation and storage solutions, which will enable decarbonisation in the longer term.

The Government will, therefore, need to manage the transition across all of the four national "switches" while maintaining energy reliability and affordability. This Bill has been set out to enable EMA to implement this energy transition without disruption while ensuring the sustainability, security and reliability of the power sector. To ensure energy resilience, there has to be some degree of re-regulation, I suppose, even as Singapore has gone through a phase of de-regulation for a strategic resource, like electricity supply.

To rely entirely on import for our fuel to generate electricity does have its challenges, as we have experienced. Now, countries like Japan, after the Fukushima incident, has stocked up on gas supplies and so has China, which is now able to release gas stocks due to shortage of coal. So, while competition has helped to drive electricity prices down for a while, the recent surge in energy prices has led to the exit of many retailers and left some consumers exposed. This is yet another example that we cannot leave it to the market to find its equilibrium for a strategic resource like electricity.

Hence, the amendment to this Bill is timely. The authorities have to take proactive steps to ensure energy security, including taking control of critical infrastructures and balancing market optimisation, with provisions for operational continuity and resilience.

Amongst the amendments is one which enables EMA to acquire, build, own and/or operate critical infrastructure. There has been a decline in investor appetite for the building of new generation capacity as the world transitions to cleaner energy sources and the COVID-19 pandemic only makes the situation worse. This amendment will enable EMA to ensure the reliability and resilience of our energy pillar should private sector fail to step up. The amendment will also enable EMA to raise capital or issue bonds for infrastructure should EMA need to step in.

This might, of course, be viewed as a step back in an otherwise deregulated market. I seek the Minister's indulgence that I have more questions than answers and hope that he can clarify my questions and provide a clear narrative of Singapore's strategic approach going forward to ensure energy resilience.

First question: how will the investment of existing power generation players in Singapore be protected?

I understand that there was a public consultation, like the Minister has mentioned. What were the industry's main concerns and how does the Government plan to address those concerns?

MTI, with EDB and MOF, are extremely skilful in selling the strengths of Singapore as an investment destination and for putting together the whole of Singapore's capabilities and incentives to attract visitors to come. Why does MTI think that the private sector may not continue to invest in this space? What is needed in order for Singapore to continue to be attractive for the big players in the energy space to land, expand and contribute to the building of our four supply "switches".

It is, of course, prudent for Singapore to build our capabilities if we are to ensure resilience and security in our key pillars. We have done it for water with our four national taps, built our own capabilities in desalination as well as NEWater, amongst others, and built a strong DNA that will ensure our water resilience and security will not be threatened. So, in the wake of recent challenges with the exit of power providers, it looks to me like a timely wake-up call that we ought to be prepared to do the same for energy. So, how will Singapore plan to execute this strategy? Do we have the skilled resources to undertake such a programme?

And lastly, how will we pacify the players in the market that there will be fair play and no unfair competition and how will we continue to attract investments in research and innovation in this whole sector? And what is the impact on Singapore households and businesses? Notwithstanding my questions, Mr Speaker, I fully support the Bill.

3.15 pm

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Speaker, I rise in support of the Bill. The proposed amendments to this Bill will ensure the sustainability, security and reliability of our power sector. By setting green standards, we are sending a clear signal that our commitment on sustainability towards the Singapore Green Plan 2030 is beyond rhetoric and about getting things done.

To strengthen energy resilience, the Government has a dual strategy. First is the diversification of energy sources by harnessing four switches, namely, natural gas, solar, regional power grids and emerging low-carbon alternatives. Second is by working closely with the generation companies to provide critical additional capacity. The adoption of this dual strategy delivers sustainable energy for Singapore and supports a viable industry that contributes to our GDP.

Notwithstanding, I would like to put forward three clarifications to this Bill.

Firstly, on the insertion of “(f) the inspection of electrical installations to assess their safety”, in section 2 of the Electricity Act, I would like to ask what sort of authority would a market support service licensee have to enter a resident’s premises and on what grounds would this be reasonable. In addition, what is the remedy to these safety issues and what are the specific safety issues EMA is most concerned about?

Secondly, on the insertion of “in connection with any purpose under paragraph (a), to construct, acquire (whether by purchase, lease or otherwise), develop, manage (including by leasing out for use) or operate…”, in section 3(3) of the Electricity Act, I would like to ask whether the use of the word “operate” involves full operating maintenance cost.

Thirdly, on the insertion of “This section [except subsection (1)(c)] applies to any infrastructure (including cable pipe-blocks and tunnels) housing or intended to house any transmission electricity cable, as it applies to any high voltage electricity cable under the management or control of an electricity licensee…”, in section 80 of the Electricity Act, I would like to ask whether the minimum refers to high voltage, 6.6 kilovolts and 22 kilovolts, or transmission electricity cable, 66 kilovolts or higher? In addition, has MTI or EMA assessed the need to protect all above-ground access to underground infrastructure, especially since the core intention is to protect the underground infrastructure itself?

I also have three proposals for MTI’s consideration.

Firstly, we must continue to work with the private sector to provide additional capacity, reduce energy wastage and implement innovative solutions to optimise usage of energy. The district cooling system is one innovative and practical example. It is an underground centralised cooling and heating system for air-conditioning of buildings. With district cooling, building owners need not invest in having their own chillers, thereby removing capital expenditure. Currently, we have one at Marina Bay that is managed by SP Group and another in the upcoming Tengah development.

Ice tanks form part of a unique design feature of district cooling systems which harnesses energy to cool the ice tanks when demand is low and provides additional cooling capacity when demand is high. This system effectively shifts the electric load requirements and optimises energy consumption throughout the day by tapering any need for energy surge or sub-optimal usage of compressors. Such new innovation implementation is necessary as current split units used in residential buildings – that is, both public and private – operate in poor energy efficiency, primarily average more than 1.5 kilowatt per tonne, because they are air-cooled and, typically, also have half or less the lifecycle.

These split units could be retrofitted with a centralised chilled water system that could operate at a significantly better energy-efficient average of less than 0.65 kilowatt per tonne that capitalises on economies of scale.

As global temperatures are set to rise, Singapore needs to fundamentally change the way we cool spaces and scale efficient cooling systems. Beyond implementing new innovations, such as district cooling systems in new developments and estates, we need to explore ways to implement such systems in mature business districts and residential estates. Beyond grants, such as the district cooling grant, we should tap on private sector innovations and financing schemes.

For building owners who would like to convert their existing chiller plant ownership into a utility-based cooling as a service, the private sector can offer to buy over the chiller plant from building owners and sell back chilled water as a utility. This way, capital expenditure is avoided by leveraging on the private sector’s innovative financing model. This will help building owners’ cashflow to support their core businesses, especially during this tight economic situation, and make the transition to more sustainable consumption easier.

Separately, as we implement an energy reset, urban planning perimeters and uses should consider various energy needs throughout the day. The peak energy needs of one activity can be curated to offset another activity through different demand periods and leading to more optimum use of energy. This could be an important new criterion for URA’s future requirements in mixed use developments.

Secondly, we should leverage on the latest advancements in building management software. With the maturity of digital solutions in the built environment today, there are significant opportunities to leverage on enterprise software as a service, often priced at affordable rates, with advanced fault detection and diagnostic and AI features to analyse for actionable insights and optimise energy efficiency, especially during low building occupancy, so that energy usage commensurates with the level of occupancy and activities.

It can also proactively support predictive maintenance which improves plant resiliency and efficiency. This is done through smart sensing, automated response and optimisation. With its advanced features, it would also ensure the health and wellness of the built environment, supported with optimal ventilation where it is required to minimise or eradicate the infectious disease risk. Thus, it also enables clean air for the health and safety of the occupants.

Based on current industry advancements, there have been proven cases that such software-driven approaches have estimated savings between 20% and 40% of energy consumption at a building and plant level. The added cost benefit of such software deployment is that it involves much lesser investments compared to hardware capital expenditure.

Lastly, adopting a similar design principle from the district cooling system where cooling capacity is stored, I would like to propose coupling Energy Storage System (ESS) to existing gencos to further improve the peak capacity demand and spinning reserve. If there is enough ESS capacity installed in the grid, it could minimise the supply-demand mismatch on a faster and larger scale. This would increase the resilience of the grid by providing more cushion to unexpected events when energy demand surges unexpectedly.

Mr Speaker, as energy forms the base input of all products and services, it has a direct impact on Singaporeans and residents. Fluctuations in energy prices affects Singapore’s cost of living and any disruptions have immense negative consequences for our industries and this puts jobs at risk. There are clear downside risks to jobs and livelihoods.

As we work towards reducing emissions, we need to ensure that this does not limit our economic growth. We need our economy to grow to provide good jobs for Singaporeans.

This amendment Bill addresses both the downside and limiting factors of our current energy strategy by boldly diversifying our energy sources, investing in new innovations to both optimise our energy usage and tapping on new forms of sustainable energy. Consequently, by investing in new taps, such as importing clean energy from regional grids, it will provide new growth opportunities and jobs for Singaporeans. I believe that we can reap the benefits from building a sustainable and efficient energy system that serves our national needs while enabling us to compete globally.

Mr Speaker: Ms Nadia Samdin.

3.25 pm

Ms Nadia Ahmad Samdin (Ang Mo Kio): Mr Speaker, Sir, uninterrupted and affordable access to energy is one of the cornerstones of modern civilisation. From keeping the lights on and putting food on the table, our ability to get to work or powering the devices that have become so integral in both our personal and professional lives, energy is the bedrock of what makes life powered by technology possible.

Fossil fuels have been the primary source of meeting our energy requirements for decades. However, the world has become increasingly aware about the negative environmental impacts of fuelling our energy needs primarily through fossil fuels. How we cross over to cleaner energy matters. Do we wait until after the switch from gas to green to make an impact? Or do we take incremental steps to do what we can in the here and now as we make the transition.

I am glad to see the Government's conviction to retiring almost all existing natural gas fuel power plants over the next one to two decades as part of our enhanced 2030 nationally-determined contributions and 2050 long-term low emissions development strategy.

We have already seen some exciting ways which Singapore plans on harnessing greener energy options, such as solar energy, clean energy imports and low-carbon alternatives. In July this year, we officially open one of the world's largest floating solar farms.

As we debate this Bill, COP26 is underway in Glasgow.

Natural gas power plants provide more than 95% of Singapore's electricity demand today. So, I am heartened by the recent announcement that Singapore intends to import 30% of our electricity supply from low-carbon sources by 2035, for example, through subsea cables from Indonesia and Australia.

I am also glad that EMA will verify the cleanliness of energy inputs, including requiring proof of carbon output. So, steps are being taken.

As we move to ensure the importation of energy from more carbon-neutral sources, I hope that the overall supply chain in which the energy is transported here will also be taken into consideration when evaluating the reduction in carbon footprint from these efforts. And in the same vein, I hope that we will also apply rigorous environmental and sustainability standards in the construction of the infrastructure.

In this Bill, I support the levers proposed to require, not just encourage, power generation companies to improve the energy efficiency of their existing units and shift towards cleaner and more efficient modes of power generation as the amendments enable EMA to implement policies, standards to require electricity generation licensees to reduce greenhouse gas emissions. In this regard, it would be important for EMA to start work early alongside industry for successful compliance with these standards. I would also like to ask if EMA is planning for a transition period for such companies and, if so, how long will this be?

Next, the proposed amendments to have EMA build, acquire, own and operate critical power sector infrastructure if the private market fails to do is a prudent one towards safeguarding the security of our power system although I recognise that certain stakeholders are concerned that these units would compete with existing units in the Singapore wholesale electricity market with the effect of depressing wholesale electricity prices.

I also support the move to allow EMA to raise capital and issue bonds as this protects our energy plans to a better degree from adverse market forces. Few governments can or choose to fill the infrastructure investment gap alone. With the Minister's approval, EMA will now have the ability to raise capital not just from the Government, but also any source in or outside of Singapore. I think it is important for Singaporeans to be able to participate and benefit from supporting the nation's infrastructural goals. Will preference be given to Singaporeans who would like to participate in the issuance of such an infrastructure bond? And under what conditions would EMA look to raise capital from outside of Singapore? In the event that large amounts of overseas capital are approved of and raised, will the Government make the sources of such capital public knowledge?

Given the lessons we can glean now from the instability of such markets, I stand in support of the spirit of the move, but I do seek some clarity in the execution.

On the instability of the energy markets, we have seen a few reports of private energy retailers closing due to rising prices. In this Bill, there are clarifications on the ability to draw down on electricity retailers' deposits to offset outstanding settlement payments and this move intends to protect consumer interests to reduce the amount of default costs borne by consumers in the event of insolvencies. It has been reported that at least five energy retailers have announced exits, while others have stopped taking on new customers and are considering changes to their business model. I applaud the Government for taking the prudent step of protecting consumers' interests by drawing down on these deposits. However, many of these companies have employees, too. And in these difficult circumstances, I would also like to ask if the Government will also consider ensuring that there is support for such employees from these companies who are choosing to downsize or exit.

The task of switching over from gas to green is a complex one and will take some time. We must pay careful consideration to ensure that while we are in transition, supply is reliable and prices are stable. Given our limitations as a small city-state, I am cognisant that we will have to straddle two walls before we can cross over the picket fence into greener pastures. On that note, Mr Speaker, I am looking forward to the journey from gas to green with stronger compliance and standards and protection for critical infrastructure and consumers. Mr Speaker, Sir, I support the Bill.

Mr Speaker: Mr Saktiandi Supaat.

3.32 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, Sir, I rise in support of the Bill.

It is, indeed, timely that this Bill is introduced at a time when there is turmoil in the electricity market which has resulted in licensed retailers throwing in the towel in Singapore. The price distortions disrupted the SGX electricity futures market, leaving the retailers in the cold as they could not hedge their exposure to the price volatility triggered by the rise in gas prices overseas. This certainly highlights the importance of Singapore ensuring that it has a strong infrastructure in place as part of our energy security.

Much has been said about going environmentally friendly and the power generation sector is certainly one big bloc. Decarbonising electricity generation is important and the gencos need to move from fossil fuel to cleaner natural gas. According to the National Climate Change Secretariat (NCCS), since 2000, the percentage of natural gas used in electricity generation rose from 19% to more than 95%. Hence, we have to cut the amount of carbon we release into the atmosphere.

But what is important is how do we manage this migration and ensure that it does not result in a hefty burden being put on the shoulders of consumers – from households to businesses, and to Town Councils in the management of municipalities. As we know, on all fronts, costs are rising from construction, manufacturing to transportation, logistics and manpower. We have to also bear in mind that, in the near future, we would be having higher GST and other taxes to add to the cost of generating electricity.

The Bill highlights the strategic move for Singapore to look at imports as the most viable option for decarbonising the power generation sector in the near to medium term. We are already importing all our energy supplies. As we are told by the EMA statement recently, the sharp rise in Singapore's spot electricity prices amid a global power crunch was exacerbated by a reduction in gas supply from Indonesia. Natural gas supply to Singapore from Indonesia has not fully recovered from disruptions in July, according to a news report on 18 October.

We will have to diversify our sources of energy and importing solar power supply from Australia-Asia Power Link (AAPowerLink) is one option on the table. Another is to tap on electricity from Malaysia which is to kick-start a two-year trial starting next year to diversify the country’s energy supply. We are also part of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project that is known as a “pathfinder” to a broader ASEAN power grid system. This will be just somewhat similar to Britain, which imports hydropower from Norway, helping to ensure secure, affordable and sustainable electricity supplies for UK consumers. Nordic power exchange, Nord Pool, held its first auction in September 2021 to trade electricity on a newly launched interconnector between Norway and Britain as both markets grapple with tight energy supplies.

Mr Speaker, this Bill provides further enhancements to the role that EMA plays going forward and with extra powers. My first question is: in our outreach to the regional supply source and where subsea cables are needed to connect with Singapore, what does it mean for our energy infrastructure demands going forward? How will the evolution of technology in energy infrastructure affect us and, if needed, how much would it cost in terms of actual infrastructure and human capital requirements and where would these increased landing points be located as it comes in into Singapore? And with the need to invest in capital for the cables and the landing stations, how much more would these add to the cost for consumers, whether it is private or public built? What can our Government do to mitigate the higher cost going forward, maybe a few decades down the road?

Next, could the Minister share with the House how do we ensure the reliability of the energy supply from these external sources? In recent times, we have seen how the COVID-19 pandemic disrupted operations in some countries. So, we need to think of contingencies so that we are not caught off-guard.

Mr Speaker, in fact, on 15 October, EMA said Singapore's power utilities might have to switch to using LNG because of the reduction in piped gas supplies from Indonesia. The resultant effect caused spot electricity futures on SGX to spike on those days. This also prompted the operator of the LNG terminal, Singapore LNG Corp, to look into boosting gas inventory to bolster energy supplies. We need to learn from this and look at how to manage such a scenario.

Another question is: if we are going to build a back-up capacity, how long can it last and do we have multiple sources for this back-up? How do we ensure, if one supply source is disrupted, the other external sources could still keep the supply flowing? I think some Members in the House mentioned this earlier, but it highlights the point that, besides diversity, we need to ensure that our external source supplies actually do not get disrupted significantly, even after diversification. For example, the natural gas supply to Singapore from Indonesia was disrupted in July and, as of October, the supply has not fully recovered. The July disruptions were blamed mainly on an unplanned shutdown at the Anoa field and planned maintenance at the Gajah Baru field, both located in Natuna, according to a report. Production in Natuna is down 27.5% from its previous peak to 370 million standard cubic feet per day.

EMA had also said that the disruptions in supply from Indonesia's gas fields in Natuna had contributed to a spike in our spot electricity prices. "The recent spike could be attributed to a number of factors, including higher than usual electricity demand, the outage of several generation units, curtailments of gas from West Natuna, as well as low landing pressure of the gas supplied from South Sumatra," EMA reportedly said.

In fact, in February 2020, the Energy and Mineral Resources Ministry of Indonesia said it would stop gas shipments to Singapore in the next three years to cater to domestic demand. "Gas exports to Singapore will stop in 2023 and we will use the gas for the domestic market”, Downstream Oil and Gas Regulatory Agency (BPH Migas) head Fanshurullah Asa said, as quoted from the ministry’s press release. Indonesia's gas exports to Singapore come from the Corridor Block, which has a supply of 300 million standard cubic feet per day. The gas supply will be channelled into the Dumai Duri transmission pipeline to be distributed to industrial estates in Sumatra, namely, the Sei Mangkei Special Economic Zone in North Sumatra, among other destinations.

Our supply from Malaysia is also another uncertainty. The 18-year deal for delivery of natural gas was expected to start from mid-2006 via a new five-kilometre pipeline linking Petronas’ Peninsular Gas Utilisation Pipeline to the Singapore Gas Transmission System. There is no guarantee that the expiring contract will be renewed.

I believe, hence, we are moving to LNG as the alternative to fill the vacuum. This is where new offshore terminals will also add Singapore to a growing list of Asian countries deploying floating infrastructure. Can the Minister give the House an update on this undertaking and how are we coping with these LNG alternatives? When would LNG likely replace our demand for natural gas for use by gencos? And what steps are in place to avoid a worst-case scenario? Would it result in any supply shortage that may necessitate a back-out of supply to households?

At this point, if I could resurface the question whether we should consider using nuclear energy as part of our energy resilience, not within the confines of Singapore, but probably from far afield, for example. This idea is not new and our founding Prime Minister Mr Lee Kuan Yew in 2008 had said that he had once considered tapping nuclear energy as the best alternative to fossil fuels for Singapore. Can the Minister share his thoughts on this, please?

Next, the Bill empowers EMA to acquire, build, own and operate critical infrastructure, including generation capacity. May I ask how EMA would play its role if it is a genco, wholesaler and regulator? Would this not open it to a conflict of interest? I think it would be useful if the Minister can share on this point. This would only cause the electricity market not to be a level playing field for all participants, if you interpret it from a conflict-of-interest perspective.

Lastly, can we also know how soon EMA would be embarking on building capacity and capability to build up its expertise to handle its expanded role in the next five to 10 years, especially so when this Bill explicitly highlights the fact that EMA's powers will be extended quite largely?

Mr Speaker: Mr Louis Ng.

3.41 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill expands the Government’s power to safeguard our energy security and reduce greenhouse gases in energy generation.

I support this Bill as it has the potential to protect the day-to-day energy needs of Singaporeans and to contribute to our commitment towards fighting climate change.

I thank MTI for conducting a public consultation for this Bill and publishing a public response to inputs received. I hope we will continue this good practice of gathering and responding to public feedback for legislative amendments.

I have three points of clarification to make.

My first clarification relates to the expansion of borrowing powers. Clause 2(a) of the Bill expands the powers of EMA. With this change, EMA can now raise loans and grant charges over EMA’s property. I understand that the goal is to ensure energy security by freeing EMA to fund its construction of critical energy infrastructure. However, it seems like this change also opens a gap in our energy security. After all, borrowing from foreign financiers may also mean granting them rights and interests over parts of our energy infrastructure. Can the Minister share in what circumstances would such foreign funding be approved by the Government? What safeguards would the Ministry implement to limit the risks of foreign funding to our energy infrastructure?

My second clarification is on the reduction of greenhouse gas emissions. In its response to feedback from the public consultation, MTI said that EMA would use its new powers under this law to develop “further targeted measures” that would reduce the power generation sector’s emissions. Can the Minister share EMA’s timeline for consulting the sector and for releasing new standards and policies? Put simply, we are already behind schedule. The latest IPCC report on climate change stresses that there is only a small window of opportunity left for countries to keep the 2050 temperature increase below two degree Celsius. Power generators will need time to adapt to any new regulations. Will the Ministry commit to setting an aggressive timeline for releasing EMA’s new policies?

In addition to sharing its timeline, will the Ministry proactively share with the public the expected emissions impact of any new power generation? After all, as Minister Grace Fu mentioned this year, the Green Plan is a living plan, designed and executed in collaboration with our people. Let us empower members of the public to understand and support policies that will help Singapore reach its climate goals.

My final clarification relates to cyber attacks. Today’s Bill focuses on energy security. However, it does not directly deal with one of the largest global threats to energy infrastructure: cyber attacks.

In 2008, an oil pipeline exploded in Turkey after cyber attackers managed to raise the pressure within the pipeline. In 2015 and 2016, cyber attacks in Ukraine shut down electricity to hundreds of thousands of people for hours. In May this year, a cyber attack forced the temporary shutdown of one of the US’ largest gas pipelines.

There have been many more of such attacks. We must be proactive and aggressive in closing any cybersecurity gaps in our energy infrastructure. To this end, I have three questions.

First, can the Government share how many cyber attacks have our energy and water infrastructure faced in recent years? I am talking about entities across the entire supply chain, including gas pipelines, generation plants, energy retailers and more. If the Government is not able to share the specific number, can it at least confirm whether attempts at an attack have taken place?

The Cyber Security Agency said in July that there had been no massive ransomware attack on our critical infrastructure. But have there been other types of attacks? After all, some attackers may aim to cause damage rather than collect a ransom.

Second, will the Government update our laws to ensure high cybersecurity standards in our energy and utilities sector specifically? Minister Josephine Teo said in October that the Government has been reviewing our cybersecurity laws. I hope that this review will consider new regulations specifically for our water supply and energy supply systems.

Third, does the Government have plans for dealing with a successful cyber attack on our energy and water infrastructure? Are there clear actions that would be taken on emergency supplies and crisis communications? After all, we can do our best to build defences, but we should not pretend that a successful attack will never happen. When it does happen, we must have contingency plans to address the unrest and emergencies that would emerge. Sir, notwithstanding these clarifications, I stand in support of the Bill.

3.46 pm

Miss Cheryl Chan Wei Ling (East Coast): Mr Speaker, with recent frequent reports on the tight energy situation both globally and locally, the topic about energy resiliency in Singapore and how this would impact electricity bills and the cost of living weigh on many people’s minds.

While logic will tell us that it is unavoidable for energy prices to rise in the short term due to a confluence of external factors, I think many would still find difficulty in understanding what we, as a nation, have to contend with in terms of the energy supply chain and its potential impact resulting in a situation of electricity shortage. Thus, it is, indeed, timely that we are now reviewing the changes required for energy resiliency in Singapore.

For this Bill, I have three areas to raise and seek clarifications.

First, the specifics about critical levers in the energy resilience measures. To enhance Singapore’s energy resilience in the longer term, it is important for us to look at it holistically from the entire value chain. We have existing assets and infrastructures that span this value chain today. But our challenge remains with the strong need for importation of energy sources. I would thus like to ask which aspect will our resiliency measures moving forward be focused on: raw material sources, including green options, energy generation, the grid distribution that supports low-carbon electricity or better balancing of power allocation and usage between industries and consumers?

In this year’s Committee of Supply (COS) debate, Minister Tan See Leng outlined that we are developing four "supply switches": natural gas, solar energy, regional grids and low-carbon alternatives, such as hydrogen, to decarbonise our electricity grids.

Given our limited land and rooftop spaces, there is a practical limit to how much we can harness from solar energy within our shores. It is thus imperative that we look further to explore importation of renewable energy sources from other countries through regional grids. However, in the race to decarbonise each economy, neighbouring countries would have their own domestic carbon reduction commitments to achieve in the near term and may not be as forthcoming towards sale of these electricity sources to us.

Just this month, Malaysia’s Energy and Natural Resources Ministry announced that only non-renewable energy is allowed to be exported to Singapore, and power sales through self-developed transmission and interconnection facilities to Singapore will not be allowed. Apart from Malaysia, I believe we may encounter similar situations with others. How then would we prepare to overcome this if Singapore’s ability to import renewable sources are limited by export measures set by other countries’ domestic considerations? Could the Ministry share whether this change in stance from Malaysia has any impact on the trial project of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP)?

It appears that continuing to import natural gas to fulfil our usage is inevitable. Today, it is a question about whether we have hedged sufficient supply to serve our needs. Tomorrow, it will be one about whether we have the ability to offset the carbon footprint generated from these non-green fuel sources.

In my view, establishing the ground infrastructure and having a detailed transition plan to accommodate the future combination of low carbon or green fuels in our energy generation and distribution system are fundamental. These infrastructure projects are extremely costly and the appropriate choice of technology selected at any point will give rise to future impact on sufficiency in supply while also having to meet the evolving and higher bars of climate change goals.

On this note, I would like to ask the Minister in the case that we switch to lower carbon sources, for example, hydrogen, this would mean some changes are required for the pipelines and electricity grids. There is also a likelihood for more public-private partnership to involve the local players and overseas companies with the expertise to enable adoption of microgrid supplies as we transition to prevent any disruption. May I know what are the expectations and parameters in which Singapore may likely adopt or move towards such changes?

Second, the impact on Smart Nation status for businesses and prioritisation for energy.

The transition towards being a Smart Nation and an attractive industry or business hub for global players to form a base in Singapore is an energy-intensive play and one with a long tail. Having said that, I belong to the school of thought that we should pursue this aspiration and continue to strengthen our ability to support these industries as they set foot on our shore. However, I feel that the path to evolve is one where the industry players and businesses here must take an active role in shaping and contributing their share of reducing energy needs and, concurrently, using technologies to enable adaptation of their facilities for usage of greener energy sources or to decarbonise existing infrastructures.

Similarly, as we prepare for the pivot towards mass electrification, for example, in vehicles, I would like to ask whether the electricity distribution grids and substations will be able to cope with the surge in usage and demand. If not, will further actions be taken to address them so as to ensure balanced stability in energy consumption over time?

Moving on, let me raise the point about consumption pattern and energy allocation of power supply. As a resource-constrained nation, we are resigned to the fact about our predominant need for energy imports. Yet, I believe it is ever so important for us to be more intentional and conscious with regard to our energy usage and allocation. As a manufacturing hub for higher value-add technologies and digitalisation, some services like data centres, foundries and green fuels will bring benefits to our broader ecosystem. But to serve their presence and expansion involves a relook at our manufacturing portfolio as well as production patterns.

There may be a need for us to be more precise on the roadmap of matching or differentiating their industrial activities’ needs versus the household activities and the office building demands by the time of the day. Has COVID-19 changed some of this and the new way of work? It warrants some hard look at the fresh data. In times of critical moments, how we allocate energy resources among various stakeholders could have far-reaching implications should there be any disruption to energy supplies or the need to meet our own carbon commitments.

Lastly, the longer-term plans for Singapore’s decarbonisation of energy sources.

Diversification has long been a cornerstone of Singapore’s public policy on resources, be it water or energy. While Minister Tan See Leng has outlined the four switches for energy, it seems difficult for us to embark on any material change of alternate supply from natural gas within the coming decade. Are there opportunities in the longer term to focus on how our carbon capture capabilities and storage or utilisation can be shared cross-borders or developed in locations where underground geologic formation permits? It would be helpful if the Minister can shed more insights on our plans in this area.

Notwithstanding the above raised, I support the Bill, as it is crucial for us to plan ahead on critical elements for future implementation and laying the path for our ability to adapt and change to cater to the ever-growing need for energy.

Mr Speaker: Mr Shawn Huang.

3.54 pm

Mr Shawn Huang Wei Zhong (Jurong): Mr Speaker, as COVID-19 measures worldwide ease, we can expect that global demand will soon reach pre-pandemic levels. This is coupled with the energy crunch in natural gas and the recent rising cost of Brent crude. As a country, we must be keenly aware that we import our energy and we must compete with the rest of the world for our energy resource. But this ability to purchase and secure energy is only a short-term measure. We are facing the dawn of the next energy transition. As we rebalance our carbon-based energy, we are faced with several critical decision points to secure our energy for the future.

I have a few questions for the Bill. Can the Minister share what are the considerations when determining the value of the security deposit? What are the options available in the event when the security deposit is insufficient to cover its obligations? What are the trigger indicators to determine that a wind-up order is necessary?

With the empowerment to build, own and operate, can the Minister share if there will be initiatives to ensure that there are economies of scale and synergies that are collectively accretive to the overall industry?

With this amendment, how will the agency better plan the new energy transition that we will face in the near future? How are we building new capabilities and rebalancing our reliance on fossil energy? What is the future for hydrogen, nuclear fission and fusion to provide safe, reliable and clean energy to power the country and our industrious Singaporeans?

The key to any energy transition plan concerning any new energy – for example, hydrogen, nuclear energy, be it fission or fusion – we must develop a clear understanding of the limitations of physics, engineering limitations and, finally, perhaps most importantly, supply chain constraints, both in materials, fuel cycles and operational implementation.

I will not go into the details of solar, wind, geothermal, green, blue, grey hydrogen, the intricacies of tritium, deuterium or super-conducting magnetic tapes.

Critically, we must see past the hype, drill down to the basics and avoid oversimplification. We must be technically strong to analyse and interpret new technologies. We must be cognisant of the engineering challenges to build, operate and manage a safe, viable, resilient and sustainable system; above all, a system that contributes to the fight against climate change. I trust that this Bill will provide the ability to build capabilities to secure new sources of energy and for our future. Mr Speaker, I support the Bill.

Mr Speaker: Minister Tan See Leng.

3.58 pm

Dr Tan See Leng: Mr Speaker, I thank the Members who have spoken in support of the Bill. Members have raised very good clarifications and suggestions which fall into four broad categories.

The first category is on energy security and resilience, including the amendments to enable EMA to build, own and operate critical power infrastructure. Second, the amendments to enhance protection of critical electricity and gas infrastructure. Third, provisions to reduce greenhouse gas emissions and enhance the environmental sustainability of the energy sector. And, finally, the impact of the energy transition on electricity prices.

Before I address these issues, I would like to thank Mr Melvin Yong, Mr Gerald Giam, Mr Desmond Choo, Mr Liang Eng Hwa and Mr Shawn Huang, for their questions and suggestions about the Open Electricity Market or OEM.

As I mentioned yesterday, the OEM remains viable but safeguards may need to be strengthened. We are very mindful of the higher electricity bills that households and businesses will be facing.

Today, households living in 1- to 2-room HDB flats, typically, benefit from GSTV U-Save rebates amounting to an average of about three to four months of the utility bills.

Together with the GSTV U-Save special payments, these households will receive rebates equivalent to about 4.5 to six months of the utility bills this year. This is what I also shared yesterday in my response to the whole series of Parliamentary Questions that were brought up and also the supplementary questions that were directed at us.

We will work with MOF to review and assess if more support is needed. My Ministry and EMA will study this closely and we will provide further updates when ready.

Let me now first address the first key issue on energy security.

Mr Saktiandi Supaat and Mr Gerald Giam asked about the measures to enhance the security and resilience of our energy supply.

During Question Time yesterday, I spoke at length about the actions that Singapore is taking to safeguard our energy security amidst the ongoing global energy crisis. I will now touch on how we can ensure energy security over a longer term.

First, diversification in energy sources. From 2013, we have supplemented Piped Natural Gas (PNG) with imported Liquefied Natural Gas (LNG).

We have been ramping up solar energy production locally and we are now one of the most solar-dense cities in the world. However, as I have said many times, solar energy alone will not be sufficient to meet our energy needs.

Based on a study conducted by Solar Energy Research Institute of Singapore, or SERIS, Singapore has a maximum solar potential of 8 gigawatt peak (GWp) and, that is, by 2050. I do not think we can wait till 2050. Even if we are able to harness all of that maximum solar potential, it would only roughly provide about 10% of our future energy needs.

So, regardless of the measures that we take through solar power adoption locally, we will still have to import significant renewable electricity from the region.

We are also developing and trialling new low-carbon alternatives, like hydrogen, as options for the longer term. I will speak and elaborate more on this later.

Second, beyond diversifying the types of energy that we use, we will also diversify the geographical sources of energy to manage our energy risks. This will be an important consideration in EMA's request for proposals (RFPs) for electricity imports.

Miss Cheryl Chan asked about the impact of Malaysia's ban on renewable energy exports to Singapore. Singapore lies in a region that has abundant renewable energy potential. For example, Indonesia has geothermal and solar power potential. Thailand, Vietnam and the Lao PDR also have good wind and hydropower potential. Beyond that, Australia is also a possible source. We welcome all companies which are keen to collaborate on the development of renewable energy sources to participate in EMA's requests for proposal for electricity imports.

The third point, back-up supply. Every source of energy has a risk of disruption.

Currently, power generation companies, or gencos as we call them, are required to stockpile at least 60 days of fuel reserves in the event of disruptions to our natural gas supply.

When we start to import electricity and harness more solar energy, we will also need to have sufficient amounts of other types of back-ups, including energy storage systems and generators. We plan to work with the private sector to build the necessary infrastructure to diversify and secure our energy supply.

However, as Mr Liang Eng Hwa pointed out, what we need may not necessarily be what private investors are able or willing to provide. Should this happen, we must be prepared to provide the infrastructure to ensure energy security and reliability for ourselves. Thus, we are moving legislation to empower EMA to acquire, build, own, and/or operate critical infrastructure. So, this is a very important and critical point.

Let me now address some of the specific issues that Members have raised about the scope of these powers.

Mr Desmond Choo, Mr Saktiandi Supaat, Mr Gerald Giam, Mr Abdul Samad, Mr Melvin Yong and Ms Janet Ang have asked how EMA intends to level the playing field between private investments and those that are built, owned and/or operated by EMA.

For a start, EMA will ensure that these infrastructures are subject to the same stringent standards and requirements as their private counterparts. EMA will put in place governance structures and, if necessary, separate subsidiaries to mitigate conflicts of interest and ensure accountability.

Nevertheless, I would like to reiterate that our preference has been, and continues to be, for the private sector to provide and operate the critical infrastructure. We remain committed to facilitating private sector investments in the energy sector.

I agree with Mr Shawn Huang that these amendments must benefit the business and household consumers.

In the event that EMA needs to intervene and provide the critical infrastructure and services needed, EMA will coordinate closely with industry stakeholders to avoid duplicative investments.

Miss Cheryl Chan asked if there are particular aspects that we will focus on to enhance the resilience of our energy sector.

The energy sector is a complex network of integrated systems. Every component will need to function well to keep the lights on. Besides ensuring access to energy sources, we also need to progressively upgrade and enhance our grid infrastructure to support rising electricity demand and a more complex power system with diverse and distributed sources of low-carbon energy.

EMA is working closely with SP Group to develop a digital twin of Singapore's physical electricity grid, which will make the transmission and distribution more accurate and efficient. We are also conducting testbeds on microgrids to assess their feasibility and ability to enhance grid resilience.

Mr Louis Ng has pointed out other threats to energy security, such as cybersecurity and foreign influence. My Ministry and EMA, are fully aware of these risks and we have put in place safeguards to address them.

On the cyber health of our energy system, there have not been any successful cyber attacks on Singapore's critical energy installations thus far, but we are not resting on our laurels. EMA has detected a few spoofing and phishing attempts targeting companies in the energy sector in the past few years, but these attacks were on IT and Non-Critical Information Infrastructure, or non-CII, networks. The spoofing and phishing attempts were also quickly contained and addressed. The operation of critical infrastructure, such as our gas and electricity systems, facilities, plants and equipment, was not affected.

Nonetheless, as I have said, we are not complacent and we take cybersecurity threats very seriously. The Electricity and Gas Acts and the Computer Misuse and Cybersecurity Act give EMA and the Cyber Security Agency, or CSA, the mandate to address cybersecurity threats.

EMA has developed a cybersecurity governance framework for the energy industry, in partnership with CSA. Under this framework, the energy industry's Critical Information Infrastructure Owners, the CIIOs, are required to meet minimum baseline cyber requirements, such as isolating computer systems from the Internet.

Any cyber incidents must be reported to EMA and CSA within two hours, which ensure that remedial efforts can be carried out in a timely manner. This is in line with the reporting requirements for Government agencies with critical infrastructure.

EMA also organises regular industrywide exercises and sharing sessions to ensure the sector's resilience and readiness in emergency responses to cyber attacks. EMA will continue to work with CSA and the industry to ensure the robustness and relevance of our cybersecurity governance framework.

This is the same for our water supply infrastructure, with a clear framework and regular exercises in place.

On foreign influence through financing, EMA will ensure that the expanded borrowing powers to issue bonds do not compromise the security of our energy system. As a general principle, any borrowing by EMA to fund energy infrastructure will not be securitised to the asset. When entering into loan agreements with financial institutions, EMA will also ensure that lenders do not have the ability to influence decisions relating to the energy infrastructure.

Let me now address some of the specific issues that Mr Edward Chia has raised on the amendments to enhance the protection of critical electricity and gas infrastructure.

The Bill will make it an offence to damage protective infrastructure housing transmission electricity cables that are 66 kilovolts and above. These are high-voltage transmission cables that serve more customers. Damage to these cables will thus have a greater impact on our electricity supply to consumers and businesses.

This Bill also clarifies the existing role of SP Services Ltd, the market support services licensee or provider, in carrying out safety inspections of electrical installations in premises to ensure safe and continued operations. This includes testing to confirm that the devices operate as intended and ensuring that the electrical socket outlets are not installed near any water point. The inspections are arranged by the licensed electrical worker engaged by the owner of the premises, with the consent of the owner of the premises.

Several Members have also spoken about the importance of ensuring the environmental sustainability of the energy sector. We agree that this is very important and we are committed to decarbonising the power sector. Enabling EMA to require licensees to reduce greenhouse gas emissions is an important step.

In response to Mr Liang Eng Hwa's suggestions, EMA will use a combination of broad-based regulatory measures and targeted support measures to encourage the whole industry to decarbonise.

Mr Louis Ng and Ms Nadia Samdin asked about our timelines for imposition of new greenhouse gas emissions standards.

The first iteration of the proposed measures may be released for public consultation as early as next year, that is 2022. In developing greenhouse gas emissions standards, EMA will ensure that these standards are reasonable and realistic, but they are also ambitious. Companies will be given time to transition. The public can monitor our progress in decarbonising the power grid via the Grid Emissions Factor report, or the GEF report, which EMA publishes on its website very year.

Mr Desmond Choo and Mr Melvin Yong asked about incentives to encourage the adoption of more energy- and carbon-efficient technologies.

Under EMA's First Energy Efficiency Grant for Power Generation Companies, S$37 million was awarded to four gencos to adopt energy-efficient technologies and equipment to reduce their carbon emissions. When completed, these projects are expected to reduce carbon emissions by over 48 kilo tonnes per annum. This is equivalent to taking about 15,000 cars off the roads annually.

Earlier this year, EMA launched the second grant call. EMA will review and calibrate the level of grants based on the carbon abatement potential of the projects.

But all of these efforts alone are not sufficient. We will need to continue to explore new energy solutions to meet our long-term energy needs and low-emission targets.

Miss Cheryl Chan, Ms Janet Ang, Mr Shawn Huang and Mr Saktiandi Supaat asked about our efforts to develop low-carbon alternatives, such as carbon capture, utilisation and storage capabilities, hydrogen and nuclear technologies. The Government is investing heavily in research and development efforts and collaborating with like-minded international partners to understand the potential for deploying these low carbon technologies.

In reply to Mr Liang Eng Hwa, our current assessment is that hydrogen will only be commercially viable around 2040. However, many countries are investing heavily in lowering the cost of producing, transporting, storing and using hydrogen. So, its viability may well come sooner.

MTI and EMA are also actively exploring low-carbon sources of energy which can be produced in Singapore, including geothermal energy, and accelerating the deployment of solar energy, notwithstanding the limited potential that we have.

As for nuclear energy, while there have been advancements in nuclear reactor technologies which have the potential to improve the safety of nuclear generation, many of these are still in the research and development phase and they have not begun commercial operations.

So, we will continue to monitor the progress of these technologies, while also strengthening our capabilities to understand nuclear science and technology to assess the implications for Singapore. We will need to carefully calibrate our transition to manage its impact on energy security and reliability. At the same time, we will also need to press on with our energy conservation efforts and find ways to use energy more efficiently. I would like to thank Mr Speaker, Sir, for raising the temperature by a couple of degrees in this room after my exhortation yesterday, so thank you very much.

I would also like to thank Mr Edward Chia for his many insightful suggestions. We will consider all these carefully. Besides technologies and systems, another critical ingredient for the energy transition is human capital.

Mr Saktiandi Supaat would be pleased to hear that EMA has been updating and strengthening its capabilities to keep pace with the changing energy landscape over the years, through capability sharing platforms with industry stakeholders and foreign regulators. EMA is also working closely with the Union of Power and Gas Employees to implement upskilling and reskilling courses to empower the workforce with the necessary skills required to support the transition. And I am heartened to hear from Mr Abdul Samad that these courses and programmes have been well-received.

On electricity costs, Mr Saktiandi Supaat and Mr Desmond Choo have also raised concerns about electricity costs associated with the energy transition, including for electricity imports. While the cost of generation may be lower, infrastructure enhancements in the form of additional landing sites, subsea interconnections, back-up and grid enhancements will add to overall costs. This is an inevitable and necessary trade-off to address climate change.

EMA will continue to work closely with industry partners to explore and develop cost-competitive and secure solutions that will meet both our long-term energy needs and low-emissions targets. At the same time, the Government will continue to provide targeted support for vulnerable households to help them cope with higher electricity costs.

Mr Speaker, our energy market has served us well for the last 20 years. I would like to echo Mr Abdul Samad’s appreciation for the hard work and the dedication shown by our brothers and sisters in the power sector. My colleagues and I remain committed to building on this strong foundation, working closely with our industry and with our union partners.

I would like to thank Members for speaking on this Bill and for the valuable comments provided. This Bill will ensure that EMA, Electricity and Gas Acts continue to remain relevant and effective, empowering EMA with the necessary levers to navigate the energy transition while safeguarding Singapore’s energy security, reliability and affordability. Sir, I beg to move.

Mr Speaker: Clarifications, please. Mr Gerald Giam.

4.22 pm

Mr Gerald Giam Yean Song: Thank you, Sir. The Minister cited a study that found that Singapore can only reach a maximum solar potential of eight gigawatts peak by 2050 and this will contribute to only 10% of energy demand. Was this study based on current solar technology or did it include projections for future improvements in the technology?

I am asking this question because I just want to be sure that the Government does not limit its expectations of the potential of solar energy on account of this study alone because technology will improve over time and the viability of solar has improved tremendously in recent years and could improve much further in the years to come.

Dr Tan See Leng: I thank Mr Giam for his question. The study by SERIS has taken in improvements in technology and it has also factored in new ways of deployment. However, as what the hon Member has also alluded to, technology keeps improving all the time. So, we have allocated a certain proportion of our energy mix – because it is one of our four switches – for renewable energy. And as long as the developments in solar power, in renewable energy continue to improve, that proportion can also continue to flex upwards. So, we are not tied down to a particular ratio in our energy mix. But moving forward, we are going to continue to explore and pursue all of these R&D initiatives relentlessly to become more and more self-sufficient.

Mr Speaker: Any other clarifications? None.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Dr Tan See Leng].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.50 pm.

Sitting accordingly suspended

at 4.25 pm until 4.50 pm.

Sitting resumed at 4.50 pm.

[Deputy Speaker (Ms Jessica Tan Soon Neo) in the Chair]