Singapore Energy Scenerio

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Energy Scenario of Singapore.

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Singapore Energy Scenerio

  1. 1. Presentation Outline: <ul><li>Singapore </li></ul><ul><li>Electricity Sector Overview </li></ul><ul><li>Electricity Market Reforms </li></ul><ul><li>Transactions in the Electricity Market </li></ul><ul><li>Pricing and Market Clearing </li></ul><ul><li>Jasbir Singh Arora </li></ul><ul><li>Lead Consultant-Power </li></ul><ul><li>SAMBHAV CONSULTING Private Limited </li></ul><ul><li>C-113,1 st Floor,Lajpat Nagar-I </li></ul><ul><li>New Delhi-110024 </li></ul>
  2. 2. Asia’s 1 st liberalized electricity market
  3. 3.
  4. 4.
  5. 5. <ul><li>Republic of Singapore- </li></ul><ul><li>Island country in the southern tip of Malay Peninsula </li></ul><ul><li>137 Kms north of the equator in the southeast Asian Region. </li></ul><ul><li>It is separated from Malaysia by the Straits of Johar to its north, and from Indonesia by the Singapore Strait to its south. </li></ul>Singapore :
  6. 6. Singapore : <ul><li>Ancient name-Temasek </li></ul><ul><li>First records of settlement -2 nd Century AD. </li></ul><ul><li>The English name of Singapore is derived from the Malay name Singapura (Sanskrit सिंहपुर &quot;Lion City&quot;). </li></ul><ul><li>Today also, it is referred to as the Lion City . </li></ul><ul><li>Sang Nila Utama, founder of Singapore, also known as Sri Tri Buana , was a prince from Palembang and according to the Malay Annals, the prince ruled the island from 1299 to 1347. </li></ul>
  7. 7. Early history of Singapore : <ul><li>The first records of settlement in Singapore are from the 2nd century AD. </li></ul><ul><li>Till 1824, it was a territory controlled by Malay Sultan. </li></ul><ul><li>It became a British colony on 2 nd Aug, 1824 till 31 st Aug’ 1963. </li></ul><ul><li>Officially gained sovereignty on 9 th Aug, 1965 after two years of joining the Federation of Malaysia in Sept, 1963. </li></ul>
  8. 8. Singapore :
  9. 9. Singapore : <ul><li>Third richest country in East Asia after Japan & Hong kong even before independence in1965 </li></ul><ul><li>GDP per capita in 1965 was $511 </li></ul><ul><li>Today, it is fourth wealthiest country in the world in terms of GDP per capita. </li></ul><ul><li>Currently the fastest growing economy in the world- economic growth for 1 st half of 2010 is 17.9%. </li></ul><ul><li>About 42% of the population are foreigners. </li></ul>
  10. 10. Role of Electricity in Singapore: Electricity plays a very important role in Singapore economy. With its history of rapid growth and expanding demand for energy, Singapore is very reliant on an efficient & modern electricity system. The reliable supply of electricity, at a competitive price, influences the ability of Singapore industry to compete internationally, which in turn has a direct impact on its economy.
  11. 11. Electricity Statistics : <ul><li>Total Installed capacity: 11506 MW (as of May, 2009) </li></ul><ul><li>Peak demand growing @ 3.5 % per annum </li></ul><ul><li>Generation volume increase @ 4% per annum over 98-08. </li></ul><ul><li>Grid -50 Hz, Network Losses - 2.77% (Yr. 2008) </li></ul><ul><ul><li>High Voltage (Transmission Network): </li></ul></ul><ul><ul><ul><li>400 KV - 3 Substations </li></ul></ul></ul><ul><ul><ul><li>230 KV - 15 Substations </li></ul></ul></ul><ul><ul><ul><li>66 KV - 81 Substations </li></ul></ul></ul><ul><ul><ul><li>Served by 5817 Km of Underground Cables </li></ul></ul></ul><ul><ul><li>Low Voltage (Distribution Network) </li></ul></ul><ul><ul><ul><li>22/ 6.6 KV - 322 Substations </li></ul></ul></ul><ul><ul><ul><li>22 KV - 4318 Substations </li></ul></ul></ul><ul><ul><ul><li>6.6 KV - 5094 Substations </li></ul></ul></ul><ul><ul><ul><li>Served by 15,219 Km of Underground Cables </li></ul></ul></ul>
  12. 12. Singapore Energy Consumption : The per capita consumption is increasing steadily and has increased by 2.6 times over the past 17 years.
  13. 13. Electricity Demand :
  14. 14. <ul><ul><li>Based on a bench marking study, Grid performance in terms of SAIDI is far better than other countries/ cities. </li></ul></ul><ul><ul><li>Transmission network acknowledged as leader in terms of sophistication & reliability. The average interruptions/ customer in electricity supply was 0.01 in 2007, while second lowest London recorded 0.33 interruptions/ customer. </li></ul></ul>Transmission System :
  15. 15. Energy Consumption Pattern :
  16. 16. Average Electricity Price:
  17. 17. Average Electricity Price:
  18. 18. Electricity Tariff Revision for the period 01.07.10 to 30.09.10: <ul><li>The Electricity Tariff for house holds increase by 2.42% or 0.57 cents per kWh to 24.13 cents per kWh. </li></ul><ul><li>The breakdown of the four components of tariff: </li></ul><ul><ul><li>Energy cost-Increased by 0.57 % -paid to the generating companies </li></ul></ul><ul><ul><li>Network cost-Unchanged at 4.92 cents/kWh-Paid to SP PowerAssets. This fee is reviewed every year and has been reduced by 10% since Oct, 2008. </li></ul></ul><ul><ul><li>Market Support Service Fee- Unchanged at 0.22 cents/kWh, this has been reduced by 21% since July, 2009 </li></ul></ul><ul><ul><li>Market Administration and PSO Fee: Unchanged at 0.06 cents/kWh-Paid to EMC & PSO. This is reviewed every year. </li></ul></ul>
  19. 19. Revision of Electricity Tariff:
  20. 20. Singapore Energy Intensity: The energy intensity in 2006 based on statistics from EIA ’ s International Energy Statistics and IEA’s Key World Energy Statistics .  Energy intensity is used as an indication of the level of energy efficiency and is measured in of energy consumption per dollar of GDP. A low energy intensity means that the country is able to produce each unit of output using less energy.
  21. 21. Electricity Demand in Singapore As per Inter-Ministerial Committee on Sustainable Development, the energy intensity (energy cons./ $ GDP) in Singapore to be reduced by 20% till 2020 & 35% till 2030.
  22. 22. Singapore Energy Consumption : The per capita energy consumption in 2006 based on statistics from EIA’s International Energy Statistics and IEA’s Key World Energy Statistics . 
  23. 23. EMA has set up a $5 million Market Development Fund (MDF) to encourage adoption of renewable solutions and help to offset the market charges associated with selling renewable energy into the grid. <ul><ul><li>RENEWABLES </li></ul></ul>Pulau Ubin island is planned to be developed as a test bed for implementing clean & renewable energy system integrated into an intelligent micro-grid.
  24. 24. <ul><li>NEA has established a $15 million seed fund focusing on waste management under Environmental Technology Research Program to build R&D capabilities, develop technical competencies & sustainable waste management solutions for Singapore. </li></ul><ul><ul><li>RENEWABLES : </li></ul></ul>
  25. 25. Singapore Power Landscape: <ul><li>80% of Singapore’s electricity demand is generated from natural gas- as per EMA reports </li></ul><ul><li>Singapore imports all its natural gas required for power generation and petrochemicals. </li></ul><ul><li>- Govt. promotes policies aimed at reducing CO 2 and sulphur emission- led to increased use of natural gas </li></ul><ul><li>- Power outages in 2003 & 2004 on account of natural gas supply disruptions. Energy System Review Committee set up to strengthen the energy system reliability. </li></ul>
  26. 26. Singapore Power Landscape: The main import of natural gas * Seneko power imports 155 million standard cubic feet per day (Mmcf/d) from Malaysia-Petronas * Keppel energy imports 115 Mmcf/d from Malaysia-Petronas. The 3 km long pipeline has a capacity to transport 290 Mmcf/d. * Singaporean consortium -Semgas purchases 325 Mmcf/d & 350 Mmcf/d from Indonesian state energy company-Pertamina.
  27. 27. Singapore Power Landscape: <ul><li>Liquefied Natural Gas </li></ul><ul><li>Singapore plans to build up a Liquefied Natural gas(LNG) terminal </li></ul><ul><li>Scheduled to operate in 2012. </li></ul><ul><li>Estimated project cost-$500million </li></ul><ul><li>Capacity: 3 MTs /annum </li></ul><ul><li>During 2005, EMA awarded feasibility study to Tokyo Gas Engineering (TGE) to advise on the project. </li></ul>
  28. 28. Electricity Market Reforms
  29. 29. Overview of Industry Reform Process: <ul><li>Electricity & piped Gas industries were traditionally vertically integrated & govt. owned. </li></ul><ul><li>Public Utility Board (PUB) was formed in May’ 1963 to undertake the supply of water, electricity & piped gas. </li></ul><ul><li>This structure served adequately for three decades </li></ul><ul><li>Upward pressure on prices has led to ask: </li></ul><ul><ul><ul><li>Whether the industry is as efficient as it Is ? </li></ul></ul></ul><ul><ul><ul><li>Competition through reforms would encourage companies to be cost efficient . </li></ul></ul></ul>
  30. 30. De-regulating the Energy Market: <ul><li>1 st phase of reforms of Electricity Industry reforms started in 1995. </li></ul><ul><li>Electricity & gas undertakings of PUB were corporatized under Singapore Power. </li></ul><ul><li>PUB re-constituted as the regulatory body. </li></ul><ul><li>Singapore Power </li></ul><ul><li> – a vertically integrated Power Company </li></ul><ul><li>SP became 100% owned by Temasek Holdings, Govt.’s umbrella trust for most of the state owned enterprises. </li></ul>
  31. 31. De-regulating the Energy Market: <ul><li>Successor entities grouped under Singapore Power: </li></ul><ul><ul><li>Two Power Generation Companies -PowerSenoko (Now Seneko Power) </li></ul></ul><ul><ul><ul><li>-PowerSereya </li></ul></ul></ul><ul><ul><ul><li>(Both supplied more than 80% of power) </li></ul></ul></ul><ul><ul><li>One Transmission Company </li></ul></ul><ul><ul><ul><li>-Powergrid (now SP PowerAssets) </li></ul></ul></ul><ul><ul><li>One Electricity retail Company- SP Services Ltd. for electricity Supply & support services </li></ul></ul><ul><ul><li>One Gas supply Company-Powergas. </li></ul></ul>
  32. 32. De-regulating the Energy Market: <ul><ul><li>Govt. set up a separate power generation utility under the ownership of Temasek Holdings, Tuas Power, which started operations in 1999 and now contributes 11% of the total electricity generated in Singapore. </li></ul></ul><ul><ul><li>Govt. opened the market to IPP and co-generators. </li></ul></ul><ul><ul><li>No limit was placed on the number of entrants </li></ul></ul><ul><ul><li>Market limitations diminished the attractiveness to new entrants. </li></ul></ul>
  33. 33. De-regulating the Energy Market: <ul><ul><li>IPPs were licensed and regulated by PUB </li></ul></ul><ul><ul><li>IPPs could only sell power to Powergrid </li></ul></ul><ul><ul><li>IPPs include </li></ul></ul><ul><ul><ul><li>SembCorp Cogen </li></ul></ul></ul><ul><ul><ul><li>Island Power </li></ul></ul></ul><ul><ul><ul><li>Keppel Merlimau Cogen </li></ul></ul></ul>
  34. 34. Generating Companies In Singapore : <ul><li>8 nos companies granted electricity generation licenses. </li></ul><ul><li>Capacity indicated is inclusive of current capacity & capacity yet to be commissioned. A total of 12330 MW as of May, 2009 </li></ul><ul><ul><li>1. Senoko Power Ltd (3300 MW) </li></ul></ul><ul><ul><li>2. PowerSeraya Ltd (3100 MW) </li></ul></ul><ul><ul><li>3. Tuas Power Ltd (2670 MW) </li></ul></ul><ul><ul><li>4. Keppel Merlimau Cogen Pte Ltd (1400 MW) </li></ul></ul><ul><ul><li>5. Sembcorp Cogen Pte Ltd (785 MW) </li></ul></ul><ul><ul><li>6. National Environment Agency (251 MW; electricity from incineration plants) </li></ul></ul><ul><ul><li>7. Island Power Company Pte Ltd (800 MW by 2013) </li></ul></ul><ul><ul><li>8. Keppel Seghers Tuas Waste-to-Energy Plant Pte Ltd (24 MW) </li></ul></ul>
  35. 35. Retailers In Singapore : <ul><li>Keppel Electric Pte. Ltd. </li></ul><ul><li>SembCorp Power Pte. Ltd. </li></ul><ul><li>Tuas Power Supply Pte. Ltd. </li></ul><ul><li>Senoko Energy Supply Pte. Ltd. </li></ul><ul><li>Seraya Energy Pte. Ltd. </li></ul><ul><li>Island Power Supply Pte. Ltd. </li></ul>
  36. 36. Transmission In Singapore : <ul><li>SP PowerAssets Ltd. </li></ul><ul><li>SP PowerGrid Ltd. </li></ul>
  37. 37.
  38. 38. Electricity Supply : Minimum reserve margin is 30% above Annual Peak Demand, to serve schedule maintenance & forced outages of generating units. ExxonMobils 220MW Cogen Plant by 2011, Tuas Power Biomass & Coal fired in 2012, Island Power Corp plan to add 800MW Gas unit by 2013, Keppel Merlinmau Cogen plan to add 2x450MW by 2013 & 2014.
  39. 39. Transmission Tie with Malaysia: Transmission system of Singapore Power Limited (SP) is connected with the National Grid of Malaysia at Seneko via two 230 kV submarine cables with a transmission capacity of 200 MW.
  40. 40. De-regulating the Energy Market: <ul><ul><li>2 nd phase of Reforms, 1 st April, 1998- Commencement of operation of Singapore Electricity Pool (day-ahead market) - Trading of electricity between generator & SP Services Ltd(Retailer). “PoweGrid” operated Transmission System as network owner, pool administrator & system operator. </li></ul></ul><ul><ul><li>Retail segment gradually opened to competition. </li></ul></ul><ul><ul><li>However, this led to a concern that electricity market is inhibiting competition and not reducing the costs. </li></ul></ul>
  41. 41. Competitive Framework: <ul><ul><li>In March’ 2000- Govt. announced a 2nd phase of liberalization </li></ul></ul><ul><ul><ul><li>Separation of contestable and Non-contestable segments of the industry. </li></ul></ul></ul><ul><ul><ul><li>Establishment of system operator & market operator. </li></ul></ul></ul><ul><ul><ul><li>Liberalization of retail market. </li></ul></ul></ul><ul><ul><ul><li>Establishment of a real-time wholesale market </li></ul></ul></ul><ul><ul><ul><li>Clear separation of the competitive parts of the market from the parts that constituted a natural monopoly. </li></ul></ul></ul>
  42. 42. Competitive Framework : <ul><ul><li>On April, 2001, a new pro-competitive Legal and Regulatory framework- Energy Market Authority(EMA)- To regulate Electricity & Gas Industry; and as PSO to ensure secure power system operation </li></ul></ul><ul><ul><li>The framework based on a series of bills passed by the parliament, restructured and liberalized the power sector. </li></ul></ul><ul><ul><li>Electricity generation and distribution opened up to competition (stages in some areas) </li></ul></ul>
  43. 43. Legislations for reform: <ul><ul><li>Public Utilities Act: </li></ul></ul><ul><ul><ul><li>Energy market regulatory functions from the Public Utilities Board(PUB) </li></ul></ul></ul><ul><ul><li>Energy Market Authority of Singapore Act: </li></ul></ul><ul><ul><ul><li>Energy Market Authority (EMA) established under Ministry of Trade & Industry- to assume regulatory responsibilities from PUB over the electricity sector </li></ul></ul></ul><ul><ul><li>Electricity Act: </li></ul></ul><ul><ul><ul><li>A competitive market framework for electricity sector- including competition policy framework . </li></ul></ul></ul>
  44. 44. Liberalization of Electricity Market: <ul><ul><li>During 2002, Energy Market Company implemented the wholesale market systems, rules & business processes </li></ul></ul><ul><ul><li>On 1 st January’ 2003, the National Electricity Market of Singapore (NEMS) established under Electricity Act, opened for trading- a progression from the pool to fully competitive wholesale electricity market. </li></ul></ul>
  45. 45. Liberalization of Electricity Market : <ul><ul><li>EMA made the initial set of wholesale market rules, which provide for the establishment and operation of the wholesale electricity market, responsible for the security and reliability of the power system. </li></ul></ul><ul><ul><li>Industry restructured to facilitate competitive wholesale & retail markets by separating the ownership of the contestable parts of the industry from those with natural monopoly characteristics. </li></ul></ul>
  46. 46. Timeline for De-regulation of the Singapore Electricity Industry:
  47. 47. A New Competitive Market, January’ 2003: <ul><ul><li>EMA launched the new Competitive Electricity Market </li></ul></ul><ul><ul><li>Consumers grouped into two categories: </li></ul></ul><ul><ul><ul><li>Contestable-Large non domestic consumers. </li></ul></ul></ul><ul><ul><ul><li>Non-contestable-primarily household. </li></ul></ul></ul><ul><ul><li>Electricity Customers in Singapore don’t buy directly from gencos, rather they can buy electricity from: </li></ul></ul><ul><ul><ul><li>Licensed retailers </li></ul></ul></ul><ul><ul><ul><li>Directly from the electricity wholesale market </li></ul></ul></ul><ul><ul><ul><li>SP services </li></ul></ul></ul>
  48. 48. Wholesale Market & Prices: <ul><ul><li>Prices are determined in the wholesale market, although EMA (Energy Market Authority-the energy sector regulator) has imposed vesting contracts on 65% of demand. </li></ul></ul><ul><ul><li>This is primarily to curb the market power of the three largest Gencos, which control over 90% of the total installed capacity. </li></ul></ul><ul><ul><li>How much to vest and at what benchmark price- reviewed after every two years. </li></ul></ul>
  49. 49. Structure of the Wholesale Market : <ul><ul><li>The wholesale market comprises of two markets: </li></ul></ul><ul><ul><ul><li>The real time market or spot market </li></ul></ul></ul><ul><ul><ul><li>Buyers and sellers trade in energy through the EMC </li></ul></ul></ul><ul><ul><ul><li>Procurement market for other ancillary services </li></ul></ul></ul><ul><ul><ul><li>EMC procures by contract the ancillary services required to maintain the secure operation of the power system. </li></ul></ul></ul>
  50. 50. Structure of the Wholesale Market : <ul><ul><li>The wholesale market comprises of two markets: </li></ul></ul><ul><ul><ul><li>The real time market or spot market </li></ul></ul></ul><ul><ul><ul><li>Buyers and sellers trade in energy through the EMC </li></ul></ul></ul><ul><ul><ul><li>Procurement market for other ancillary services </li></ul></ul></ul><ul><ul><ul><li>EMC procures by contract the ancillary services required to maintain the secure operation of the power system. </li></ul></ul></ul>
  51. 51. The Energy Market Authority: <ul><ul><li>EMA is the Singapore Govt. agency in the gas & electricity market. In addition to the regulatory assignments, it also works as the Power System Operator. </li></ul></ul><ul><ul><li>Regulatory powers of EMA are provided under various statues. </li></ul></ul><ul><ul><li>Specifically under section-3 of the Electricity Act, EMA is charged with the general administration of the Act and with exercising the functions: </li></ul></ul>
  52. 52. The Energy Market Authority: <ul><ul><li>Protect the interests of consumers with regard to price, reliability and quality of services. </li></ul></ul><ul><ul><li>Performs the function of economic & technical regulator </li></ul></ul><ul><ul><li>ensure efficient service by the licensees </li></ul></ul><ul><ul><li>security of supply to consumers and secure operation of transmission system </li></ul></ul><ul><ul><li>create an economic & regulatory framework for the electricity sector that promotes competitive, fair & efficient market conduct and restricts misuse of monopoly. </li></ul></ul><ul><ul><li>Advise Govt. on matters related to electricity system. </li></ul></ul>
  53. 53. The Energy Market Company: <ul><ul><li>A company jointly owned by EMA (51%) and M-co(the Marketplace company) Pte Ltd.(49%), New Zealand. </li></ul></ul><ul><ul><li>EMC is licensed to operate the wholesale market. </li></ul></ul><ul><ul><li>Functions of EMC are: </li></ul></ul><ul><ul><ul><li>Operate & administer the wholesale market. </li></ul></ul></ul><ul><ul><ul><li>Prepare schedules for Genco, loads & transmission syst. </li></ul></ul></ul><ul><ul><ul><li>Settle account of market participants </li></ul></ul></ul><ul><ul><ul><li>Facilitate planning & augmentation of trans. syst. </li></ul></ul></ul><ul><ul><ul><li>Facilitate decisions for investment and use of resources </li></ul></ul></ul>
  54. 54. The Power System Operator: <ul><ul><li>Role of PSO (division of EMA) is to ensure the security of supply to consumers & secure operation of the power syst. </li></ul></ul><ul><ul><li>Functions of PSO are as under: </li></ul></ul><ul><ul><ul><li>Maintaining the reliability of the power system. </li></ul></ul></ul><ul><ul><ul><li>Co-ordinating the outage of facilities. </li></ul></ul></ul><ul><ul><ul><li>Providing network status & load forecasting to EMC for the purpose of market clearing. </li></ul></ul></ul><ul><ul><ul><li>Co-ordinating the actions of EMC & other market participants during emergencies. </li></ul></ul></ul><ul><ul><ul><li>Dispatching facilities. </li></ul></ul></ul>
  55. 55. The Market Participants: <ul><ul><li>A Market Participant is one that: </li></ul></ul><ul><ul><li>1. Has an electricity license issued by EMA or has been exempted from the need to hold an license. </li></ul></ul><ul><ul><li>2. Has been registered with EMC as a market participant. </li></ul></ul><ul><ul><li>In Singapore, the market is a compulsory market, i.e. whoever wishes to use the transmission system must be registered with the EMC as a market participant. </li></ul></ul>
  56. 56. The Market Participants: <ul><ul><li>A Market Participant is one that: </li></ul></ul><ul><ul><li>1. Has an electricity license issued by EMA or has been exempted from the need to hold an license. </li></ul></ul><ul><ul><li>2. Has been registered with EMC as a market participant. </li></ul></ul><ul><ul><li>In Singapore, the market is a compulsory market, i.e. whoever wishes to use the transmission system must be registered with the EMC as a market participant. </li></ul></ul>
  57. 57. The Market Participants: <ul><ul><li>The market participant may be: </li></ul></ul><ul><ul><li>The transmission licensee; </li></ul></ul><ul><ul><li>Generation licensee; </li></ul></ul><ul><ul><li>Retail electricity licensee; </li></ul></ul><ul><ul><li>Large contestable consumers including wholesale traders; </li></ul></ul><ul><ul><li>Any Govt. dept., which generate electricity before 1 st April, 2001. </li></ul></ul><ul><ul><li>MSSL is not a market participant. </li></ul></ul>
  58. 58. Generators: <ul><ul><li>NEMS, it is mandatory for all generators of 10 MW or more to be licensed. Generators below 10 MW at a single location are exempted from licensing and are licensed only as a wholesaler. </li></ul></ul><ul><ul><li>Generators (>10 MW) required to be registered as a dis patchable facility with EMC. </li></ul></ul><ul><ul><li>Generators( > 1MW but <10MW) have the option of being dis patchable or not. These are required to be registered as generation settlement facilities for settlement purposes. </li></ul></ul><ul><ul><li>It ensures inclusion of all generators in the dispatch process & need to share the system & market costs </li></ul></ul>
  59. 59. Generators: <ul><ul><li>A generator that participates in the wholesale market must comply with: </li></ul></ul><ul><ul><ul><li>License with EMA as a generator & as a wholesaler. </li></ul></ul></ul><ul><ul><ul><li>Register with the EMC as a market participant. </li></ul></ul></ul><ul><ul><ul><li>Connection agreement with SP Powergrid, which acts on behalf of SP Power Assets. </li></ul></ul></ul><ul><ul><ul><li>When chooses to be dis-patchable, registration with EMC as a “ Generation registered facility”. </li></ul></ul></ul><ul><ul><ul><li>Non-dis-patchable generators needs to be registered with EMC as “generation settlement facility” is primarily to ensure adequate metering in place. </li></ul></ul></ul>
  60. 60. The Transmission Company: <ul><ul><li>Powergrid owns all of the HT/LT network assets in Singapore. </li></ul></ul><ul><ul><li>Powergrid restructured in Oct, 2003: </li></ul></ul><ul><ul><ul><li>SP PowerAssets-owns the network assets. </li></ul></ul></ul><ul><ul><ul><li>Management company- SP Powergrid </li></ul></ul></ul><ul><ul><li>SP PowerAssets is not permitted to compete in the energy market. </li></ul></ul><ul><ul><li>As a transmission licensee, SP PowerAssets is responsible for the operation and maintenance of the transmission system and for system planning and expansion. </li></ul></ul><ul><ul><li>Charges for transmission services are regulated by EMA </li></ul></ul>
  61. 61. The Market Support Service Licensee: <ul><ul><li>Presently only SP services Ltd. Is the sole MSSL. </li></ul></ul><ul><ul><li>SP services charges regulated fees (approved by EMA) on its customers for market services provided. </li></ul></ul><ul><ul><li>Role of MSSL : </li></ul></ul><ul><ul><ul><li>reading meters & manage the data </li></ul></ul></ul><ul><ul><ul><li>facilitating access to the wholesale market for contestable consumers. </li></ul></ul></ul><ul><ul><ul><li>facilitate transfer of contestable consumers between retailers. </li></ul></ul></ul><ul><ul><ul><li>supply of electricity to non-contestable consumers. </li></ul></ul></ul>
  62. 62. TRANSACTIONS IN THE ELECTRICITY MARKET
  63. 63. TRANSACTIONS : Requirement of License to conduct most electricity-related function, issued by Energy Market Authority(EMA) after ensuring compliance with relevant practice codes & standards of performance. National Electricity Market of Singapore (NEMS) Wholesale Market Retail Market Real-time / Spot Market Procurement Market <ul><li>Trading between Sellers & Buyers thru EMC </li></ul><ul><li>Energy </li></ul><ul><li>Regulation (UI) </li></ul><ul><li>Reserve </li></ul>Procurement of other ancillary services by EMC on behalf of PSO to maintain secure grid operation Being introduced in stages At present, Contestable consumers are those who have more than 10,000 kwh of average monthly consumption Non-contestable consumers (~ 1 million) supplied by Market Support Services Licensee (MSSL - SP Services Ltd ). Retail competition for such customers under study .
  64. 64. TRANSACTIONS
  65. 65. <ul><li>Permitted Relationships in NEMS: </li></ul><ul><ul><li>Transmission licensees (& MSSL) not to trade in wholesale market or conduct competitive activities viz. generation, retail or to own such entity. </li></ul></ul><ul><ul><li>Generators may trade in wholesale as buyer or seller and may own a retailer but not permitted to conduct Transmission or market support services (MSS). </li></ul></ul><ul><ul><li>Retail licensees may trade in wholesale market or obtain supply from MSSL or import electricity but not permitted to conduct Transmission or MSS. </li></ul></ul><ul><ul><li>Contestable consumers may purchase from a retailer of their choice; directly from wholesale market; or from wholesale market indirectly through MSSL. </li></ul></ul><ul><ul><li>All other consumers (non-contestable) are required to obtain supply from MSSL. </li></ul></ul>
  66. 66. Vesting Contracts : <ul><li>Market encourages bilateral hedge contracting. </li></ul><ul><li>Special financial contracts (Vesting Contracts) are imposed by EMA on three large Generators through their license conditions - Senoko Power, PowerSeraya and Tuas Power, to reduce the market power of large generators without interfering with the structure of wholesale market. Thus promotes competition & efficiency in electricity market. </li></ul>
  67. 67. Vesting Contracts : <ul><ul><li>Exists between large generating companies and MSSL- SP Services Ltd. as the agents for consumers as a whole. </li></ul></ul><ul><ul><li>Pricing provisions of Vesting Contract intended to reflect economics of new generation plant. Contract price set at about Long Run Marginal Cost(LRMC) of new generator and same Strike Price applies to all generators. </li></ul></ul><ul><ul><li>Contract quantity is based on generation capacity and set to limit the market power of generators to acceptable level to encourage avg. spot market price not above LRMC. </li></ul></ul>
  68. 68. Vesting Contracts : <ul><ul><li>In Peak hours, it is large proportion of total load and off-peak times smaller proportion. </li></ul></ul><ul><ul><li>Level of contract cover exceeds non-contestable requirements, balance is allocated to contestable consumers. </li></ul></ul><ul><ul><li>Settlement is through EMC settlement system and SP Services (MSSL) allocate the net benefits or costs of the vesting contracts to the retailers, the non-contestable consumers and contestable consumers who purchase electricity from the pool. </li></ul></ul>
  69. 69. <ul><li>Dispatch of Electricity : </li></ul><ul><ul><li>Generators offer capacity in market in Price/ Quantity pairs. </li></ul></ul><ul><ul><li>PSO provides prediction of expected load & system constraints if any for the half hour period. </li></ul></ul><ul><ul><li>Dispatch schedule along with associated energy market price determined every Half-Hour by a computer model i.e. Market Clearing Engine (MCE). Also determines which plant is on reserve & regulation duty along with its market prices. </li></ul></ul><ul><ul><li>Among the many feasible schedules for half-hour, MCE determines the optimal least-cost set of offers for each of energy, regulation & reserve. </li></ul></ul><ul><ul><li>Dispatch schedule is commensurate to system constraints, reserve & regulation requirements & dynamic characteristic of generation plant and meeting projected load at each node in transmission system. </li></ul></ul><ul><ul><li>Any deviation from estimated load & corresponding schedule is handled by PSO using ancillary services. </li></ul></ul><ul><ul><li>Different energy prices apply to different nodes due to effect of losses & congestion. </li></ul></ul>
  70. 70. <ul><li>Dispatch of Electricity : </li></ul><ul><li>The Market Clearing Engine (MCE ) accounts for the following constraints: </li></ul><ul><ul><li>Offers made by generators & estimated demand at each node on network. </li></ul></ul><ul><ul><li>Reserve & Regulation requirements including the offers made by interruptible load for reserve. </li></ul></ul><ul><ul><li>Available capacity & Ramping rate </li></ul></ul><ul><ul><li>Relationship between energy production, reserve capacity & regulation capacity for each plant. </li></ul></ul><ul><ul><li>Physical limitations on the flows that may occur on transmission system. </li></ul></ul><ul><ul><li>Losses & System security constraints </li></ul></ul><ul><li>Unit Commitment : Self-commitment market. No payments made for start-up / shutdown. </li></ul>
  71. 71. <ul><li>RESERVE & REGULATION </li></ul><ul><li>Reserve : </li></ul><ul><ul><li>Reserve generation capacity required to take care of unexpected unit outages. </li></ul></ul><ul><ul><li>Three levels of Reserve are provided - 8 seconds, 30 seconds, 10 minutes. </li></ul></ul><ul><ul><li>Quantity of Reserve required by PSO is determined dynamically considering: size of largest generating unit, stability of unit under contingencies and correlation of unit failure with other contingences. </li></ul></ul><ul><ul><li>Reserve can be provided by Generator or Load. Offers from generator for reserve can only be made in association with corresponding offer for energy. </li></ul></ul><ul><ul><li>Payments required since the facilities forego opportunity of dispatch. </li></ul></ul><ul><ul><li>Interruptible Load as Reserve: Can be switched-off very quickly and plays significant role as supplier of 8 seconds & 30 seconds Reserve. </li></ul></ul>
  72. 72. <ul><li>RESERVE & REGULATION : </li></ul><ul><li>Reserve (contd.) </li></ul><ul><ul><li>Units capability to provide Schedule output with Reserve (based on its Ramping property) has to be certified for meeting the requirements of registration to supply reserve. </li></ul></ul><ul><ul><li>Cost of reserve is recovered from all generators operating in that half-hour by a levy. Since requirement of Reserve in the market is due to Generators. </li></ul></ul><ul><ul><li>Variant of Runaway model used to allocate to dispatchable facilities. More weights on facilities generating higher quantity & on those with poor reliability history. </li></ul></ul><ul><li>Regulation </li></ul><ul><ul><li>“ Regulation” or “Load-following” is required to cover second to second variation in load from estimated load as a normal operation requirement. </li></ul></ul><ul><ul><li>Cost of Regulation is recovered from Load and first 10MW of each generating facility being dispatched, since these create need for Regulation. </li></ul></ul>
  73. 73. <ul><li>OFFER PROCESS : </li></ul><ul><ul><li>Generators make offers to supply Energy, Reserve & Regulation for each of their units in each half-hourly period in which they want to operate. Provided generators are registered for supply of Regulation. </li></ul></ul><ul><ul><li>Interruptible load may make Reserve offers. </li></ul></ul><ul><ul><li>Energy offers are made at the Node where the generating facility is located. </li></ul></ul><ul><ul><li>The Market considers the most recent offer made for each half hour and does not distinguish between offers used for the market outlook, pre-dispatch or real-time process. </li></ul></ul><ul><ul><ul><li>Generators are required to make standing offer. Especially valuable for smaller generators as it eases administrative burden. </li></ul></ul></ul><ul><ul><ul><li>Market participants can change offers till Gate closure. </li></ul></ul></ul><ul><ul><ul><li>Up to 10 Price - Energy quantity bands for each facility for each half hour can be offered. </li></ul></ul></ul><ul><ul><ul><li>Up to 5 Price - Reserve and Regulation Quantity bands may be offered </li></ul></ul></ul>
  74. 74. <ul><li>Market Outlook, Pre-dispatch Scenario, Short Term Schedule : </li></ul><ul><li>Prior to each half-hour dispatch period, series of indicative market & pre-dispatch scenario are prepared. Facilitates dispatchable generators to offer efficiently & reduce risk, help outage planning and indicate consumers/ retailers about the expected price so that remedial action be taken. </li></ul><ul><ul><li>Market Outlook Scenarios: Six day rolling horizon re-issued daily. Indicative pre-dispatch schedules and prices are issued for next week. </li></ul></ul><ul><ul><li>Pre-dispatch Schedules: 1 to 2 day horizon re-issued every two hours. Indicative pre-dispatch schedules and prices are issued for current day and next dispatch day. </li></ul></ul><ul><ul><li>Short Term Schedule: Issued every half hour covering 12 dispatch periods (6 Hours) after the dispatch period in which it was issued. Used for indicative purposes. </li></ul></ul>
  75. 75. <ul><li>REAL TIME DISPATCH : </li></ul><ul><li>Scenarios are followed by the Real-Time dispatch, consisting of real time dispatch schedule and ex-ante market prices. </li></ul><ul><li>At this point Generators are committed to their offer prices and quantities. </li></ul><ul><li>Gate Closures on Offers : </li></ul><ul><li>Effective Gate closure - The last time for change in offers under normal condition is 65 minutes prior to beginning of dispatch period . Changes beyond this upto firm gate closure limit is reported by EMC to market surveillance panel and is subject to investigation. </li></ul><ul><li>Firm Gate closure : Market software can not accept any change in offers beyond this limit. Offer variation data for a dispatch period must be submitted no less than 5 minutes prior to dispatch period . </li></ul>
  76. 76. <ul><li>ANNUAL OUTAGE PLANNING : </li></ul><ul><li>PSO coordinates outages through annual outage planning process. Each market participant prepares its own Long Term Outage plans and to submit outage requests at various times for approval, confirmation & final consent by PSO. </li></ul><ul><ul><li>Participant submits the long-term outage plan to PSO. </li></ul></ul><ul><ul><li>PSO reconciles all participants’ plans into provisional outage plan. </li></ul></ul><ul><ul><li>Conflicts if any among participants plan is communicated by PSO, resubmissions made by participants after conflicts are resolved. If not settled mutually PSO resolves the issue based on time of receipt of proposal. </li></ul></ul><ul><ul><li>PSO publishes approved outage plan. Revisions can be submitted for approved plan. </li></ul></ul><ul><ul><li>PSO has authority to cancel approved plan, if risk to reliable network operation is apprehended. </li></ul></ul><ul><ul><li>At the time draws near planned outage, participants are required to take final approval, confirmation of the outage and within Hours before commencement of Outage, Final consent of PSO. </li></ul></ul>
  77. 77. <ul><li>Vesting Contract Price : </li></ul><ul><li>Price is set taking into account </li></ul><ul><ul><li>long run marginal cost of most efficient technology that accounts for at least 25% of system demand. ( e.g. 370MW plant based on CCGT technology) </li></ul></ul><ul><ul><li>Policy objective to promote competition & efficiency in market for consumers benefit. </li></ul></ul><ul><li>EMA conducts biennial review of LRMC parameters and at other times as considered necessary. May appoint consultants to assist in review. </li></ul><ul><li>Vesting contract is currently set at 55% of total electricity demand. It was 65% till 2007 following commercial operation of Keppel Melinmau Cogen (500MW). </li></ul><ul><li>Target to progressively roll back to 40% if market competition in generation is keener & market power correspondingly reduces. </li></ul><ul><li>25% of retail market is non-contestable & supplied power at regulated tariff. </li></ul>
  78. 78. <ul><li>Vesting Contract Price : </li></ul><ul><li>Price is set based on LRMC parameters determined for one “Base Month”. However to minimize volatility in certain parameters data for selected parameters may be based on average for a particular period </li></ul><ul><li>Presently review of LRMC parameter for the period 1.1.2011 to 31.12.2012 is underway. </li></ul><ul><li>Review for the Year 2011 & 2012 at a Glance : </li></ul><ul><li>PA Consulting Group Pte Ltd. appointed as consultants. </li></ul><ul><li>Most efficient technology for new entrant considered - 2x370 MW CCGT based. And achievable effective load considering ambient conditions, fouling, erosion etc. - 382 MW. </li></ul><ul><li>Other parameters: </li></ul><ul><ul><li>Heat Rate: 6976 Btu/ Kwh (1758 kcal/kwh) (1000 Btu = 252 Kcal) </li></ul></ul><ul><ul><li>Construction time: 30 Months </li></ul></ul><ul><ul><li>Economic life time: 24 Years (based on PA’s modelling) </li></ul></ul><ul><ul><li>Ex-bus PLF:74.9% ( based on actual performance of existing F - class CCGT ) </li></ul></ul>
  79. 79. PRICING & MARKET CLEARING
  80. 80. Real time Market : <ul><ul><li>This uses a form of auction pricing to settle transactions in the market </li></ul></ul><ul><ul><li>Every half-hour, the spot market decides: </li></ul></ul><ul><ul><li>The dispatch qnty. that each generation facility is to provide </li></ul></ul><ul><ul><li>The reserve capacity required to be maintained by each facility </li></ul></ul><ul><ul><li>The corresponding wholesale spot market price for energy, reserve </li></ul></ul>
  81. 81. Pricing and Market Clearing : <ul><li>The overall least-cost dispatch schedule and marker prices are determined each half hour by a computer model called the Market Clearing Engine (MCE). </li></ul><ul><li>MCE takes into account the system constraints and generates the energy prices- referred to as Nodal Prices. </li></ul><ul><li>Nodal Prices vary at different points of the network. </li></ul>
  82. 82. Market Clearing Process: Three Generators –A, B & C, whose offers consists of 4 prices/qnty. tranches each. The tranches are arranged in the ascending price order . Market clearing price is at the point where total demand is met by the offer tranches. The total demand is a forecast of the load for that period. Offers below the market clearing price are accepted and those are dispatched and those above the market clearing price are not accepted and can’t be dispatched. At the margin, the offer that sets the price is usually only partially dispatched, such a generator is called the marginal unit.
  83. 83. Wholesale Market Operation:
  84. 84. Market Clearing Process: In economic terms, this is a supply and demand curve. The supply curve is the stepped offer from generators, and The demand curve is the forecast load. Market clearing price and qnty. are set by the intersection of these two curves. 1.Generators with tranches below the clearing price make a profit- producer surplus , the gain made by more efficient generators. 2. In-efficient generators are not dispatched.
  85. 85. Nodal Pricing: <ul><li>The most accurate pricing mechanism-derieved from the marginal cost theory. </li></ul><ul><li>It refers to computing different prices at every node of the network accounting for all costs & transmission constraints. </li></ul><ul><ul><li>Short run marginal costs </li></ul></ul><ul><ul><li>Long run marginal cost </li></ul></ul>
  86. 86. Pricing and Market Clearing-NEMS : NEMS also uses the nodal pricing method, i.e. pricing at each node shall be influenced by the physical properties and constraints of transmission system. Dis-patchable generators are paid the nodal price at each node. Market clearing at each nodes takes place simultaneously. Difference in nodal price may occur due to transmission losses or physical limitations of the Transmission system.
  87. 87. Pricing and Market Clearing_ NEMS : By responding to nodal prices, the market creates a dispatch schedule that optimizes the use of transmission system In the long term, Nodal prices encourages the investment decisions. Generators would try to build up at high price nodes New transmission system is proposed, nodal prices help to evaluate the alternatives.
  88. 88. Nodal Pricing Mechanism: <ul><li>Short run nodal price changes dynamically as a function of load distributions, system structure & generation output patterns. </li></ul><ul><li>This reflects only the operating costs </li></ul><ul><li>Major advantage is that the real operational pricing signals are revealed. </li></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>Intense real time computation reqd. </li></ul></ul><ul><ul><li>Wrong incentive for the TO not to relieve congestion </li></ul></ul><ul><ul><li>Dramatic volatility of the price </li></ul></ul>
  89. 89. Zonal Pricing Mechanism: <ul><li>Zonal pricing mechanism is adopted as an alternative to nodal pricing mechanism due to complications </li></ul><ul><li>Nodal pricing is first utilized to obtain prices at each nodes/ buses and then the weighted average value of all nodal prices is set as zonal price. </li></ul><ul><li>Done periodically to account for changes in system conditions </li></ul><ul><li>Nodal prices at each nodes within a zone should be reasonably close, or else the zonal boundaries are needs to be adjusted. </li></ul><ul><li>Purpose of zonal price is congestion management. </li></ul>
  90. 90. Market Clearing Process, Unit Commitment: <ul><li>The NEMS is a self commitment market. </li></ul><ul><li>Unit commitment is the responsibility of each generation company and no start-up, shut down payments are made. </li></ul><ul><li>Generators are expected to factor in these into their offers </li></ul><ul><li>PSO needs to know and account for the ability of the plant to ramp up and down. </li></ul><ul><li>This information is part of the standing capability data required from each facility. </li></ul>
  91. 91. Uniform Singapore Energy Price: <ul><li>In Singapore, Generators are paid their nodal price. </li></ul><ul><li>Buyers from the wholesale market pay a uniform overall average price, no consumer is locationally dis-advantaged. </li></ul><ul><li>a USEP is calculated from the weighted average of nodal prices over all the nodes. </li></ul><ul><li>Total price paid by all consumers under USEP is same as the total price would be if each consumer pays the respective prices at the node at which it is connected. </li></ul>
  92. 92. Accounting for Electrical Losses: <ul><li>Electrical losses on the network is very low. </li></ul><ul><li>Nodal prices accounts for such losses. </li></ul><ul><li>However, total paid to the generators will usually be less than that collected from the loads. </li></ul><ul><li>Export/Import flows through the intertie with Malaysia also impacts the difference. </li></ul><ul><li>The impact could be positive or negative. </li></ul><ul><li>EMC has to settle this difference- settlement surplus </li></ul><ul><li>This is return to the customers by crediting to the energy import, export flows through the inter-tie with Malaysia </li></ul>
  93. 93. Smart Energy, Sustainable Future: Smart Energy : How Singapore seeks to harness, deliver and utilize energy in an innovative and efficient way. Sustainable future : Need to develop robust energy solutions that endure over time.
  94. 94. Thank You

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