(EnergyAsia, March 12 2014, Wednesday) — Futures trading and solar energy will debut on the Singapore electricity markets later this year as part of a plan to increase price and supply competition.
Following a six-month trial starting April, the Singapore Exchange (SGX) will aim to launch its electricity futures contract that will allow consumers to lock in their power purchases and prices for up to two years, said the exchange's commodities director Matthias Obert.
He said the contract will allow consumers to take a longer term position of their electricity purchases to cancel out short-term fluctuations in spot market prices.
"Electricity can be bought on the market, but prices are uncertain and very volatile. These can be balanced out by purchases of futures contracts," said Mr Obert at last month's Seraya Energy forum.
Singapore's electricity prices have become more volatile on account of weather conditions and geopolitical events that cause fuel oil prices to move sharply.
Consumers will be further empowered by the government's move to allow smaller retail consumers choose their suppliers as well as admit the use of solar-generated electricity.
Speaking in Parliament, Second Trade and Industry Minister S. Iswaran announced that those who use at least eight megawatt-hours (MWH) of electricity per month will be allowed to choose their supplier from April 1, a market privilege now opened only to those who consume at least 10MWH. From October 1, that bar will be lowered to those whose electricity consumption exceeds 4MWH.
Mr Iswaran said at least 15,000 consumers will benefit from this change, while power producers will gain as they will be able to group demand from various locations to meet the lower threshold of this new contestable market.
To lighten dependence on fossil fuels, the government will step up its campaign to develop the production and use of renewable energy, especially solar power, in government buildings and state land.
It has set a target for Singapore's solar power capacity to reach 350 megawatt-peak (MWp) by 2020, up from 15 MWp now. The new capacity will be sufficient to meet about five percent of the country's peak electricity demand in 2020.
"Among the various renewable energy options, solar has the greatest potential for wider deployment in Singapore," he said.
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