Surge In Natural Gas Prices Wrecks Singapore Electricity Market

The global energy crunch which has sent natural gas prices to record highs and caused power shortages in many parts of the world is now spilling over to the island state of Singapore, which is dependent on gas for power generation, Jessica Jaganathan and Chen Lin reported for Reuters.

Photo Insert: Singapore LNG Corporation is a driver and catalyst for the growth of LNG-related businesses in Singapore.

Three energy providers in Singapore are exiting the market, and according to company sources, at least two others have stopped accepting new clients amid rocketing wholesale energy prices that retailers are unable to pass on to customers.

Singapore's energy regulator Energy Market Authority (EMA) said on Saturday it was working closely with retailers facing challenges from volatile electricity prices -- which rose to record high levels this month -- and said there will be no disruption to their customers' electricity supply.

Singapore is one of few countries in Asia with a fully liberalized electricity retail market.

Power generation firms in Singapore sell electricity in the Singapore Wholesale Electricity Market (SWEM) every half hour, with the price determined by supply and demand at that time. Electricity retailers buy electricity in bulk from the wholesale market and compete to sell electricity to consumers.

For the past two weeks, wholesale prices have experienced higher price volatility, due to a rise in global liquefied natural gas (LNG) prices, higher than usual electricity demand in Singapore, and lower piped natural gas supplies from Indonesia, EMA has said.

That has placed retailers which do not have their own power generation assets and have locked in contracts with customers at fixed prices, under tremendous strain, though such retailers without generation assets make up less than 5% of the retail space.

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