Transcript Document

Singapore Update
Presented by Dave Carlson
Chief Executive Officer
30 October
1
Agenda
• Background
• Key features of the NEMS
• Price determination
• The move to gas
• Benefits
• Issues and challenges
• Market power
• Vertical integration
• Retail competition
• Fuel supply
2
Background
Singapore’s Market
• Wholesale market:
• Mandatory gross pool
• Locational marginal pricing
• Half-hourly pricing and dispatch
• Co-optimisation of energy and ancillary products
• Daily settlement
• Five active generators
• Retail market:
• Industrial and commercial customers are contestable
• Five active retailers
• Householders supplied by utility that also owns t&d assets
4
Wholesale Prices
• Comfortable supply cushion
• Peak demand = 5,475MW with 3.58% growth p.a.
• Installed capacity = 10,104MW
• Transmission system unconstrained during normal
operations
• Prices generally influenced by:
• Load profile
• Fuel costs (HSFO)
• Unplanned equipment outages
• Gas supply issues
5
The move to gas
Market Share by Plant Type 2003/05
2003
2005
2004
80%
70%
60%
50%
40%
30%
20%
10%
0%
CCGT
ST
ST Incineration
6
Location Map of NEMS Generators
Electricity interconnection
with Malaysia
Natural gas pipeline
From Malaysia
Senoko Power
(Pipeline expected to
Be operational in 2005
Tuas Power
Power Seraya
SembCorp
Represents incineration plants operated
By the National Environment Agency
Natural gas pipeline from
West Natuna
Natural gas pipeline from
Sumatra (Asamera)
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Benefits
Benefits
• Net benefit of S$128.6m in first 2 years of operation (PwC
study)
• Singapore’s electricity price competitiveness ranking
improved from 41st/48 in 2001 to 29th/47 in 2005 (IMDInternational Competitiveness Ranking)
• Electricity prices respond to market fundamentals
• Competition has cushioned impact of recent high oil
prices on electricity prices
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160
70
140
60
120
50
100
40
80
30
60
20
40
10
20
0
0
S$/MWh
80
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US$/barrel
Influence of fuel prices
2003
Brent Crude Oil Price
2004
180-CST HSFO Price
2005
2006
Wholesale Electricity Price
10
Issues and Challenges
Market Power
•
Concentrated market with three major generators holding 85%
market share
•
Regulator concerned that these generators could potentially
exercise market power to influence prices
•
Introduced vesting contracts
•
•
Mandatory hedge contract for generators
•
Cover approx 65% of load priced set at LRMC of most efficient
plant in the power system
•
LRMC reset quarterly – reflects fuel costs
•
Vesting quantity reduced as market becomes less concentrated
Dampened wholesale settlement prices
12
Vertical Integration
• All major generators have affiliated retail companies
• Vertical integration and vesting contracts mean that all
market participants are nearly perfectly hedged
• This limits the need for a hedge contract market
• As a result, there is very limited bilateral contracting
between spot market participants
13
Retail Competition
• Retail contestability introduced in phases based on
consumption level
• Nearly 75% of the market is open
• Contestable consumers can chose to buy from a retailer,
directly from the market or indirectly from SP Services
• Non-contestable consumers are supplied by SP Services
at a regulated (un-subsidised) tariff
• Government has decided to defer making the remaining
(domestic) customers contestable
14
Fuel Supply
• Singapore is highly reliant on piped natural gas for
electricity production
• In June 2004 Singapore experienced a partial power
black out due to a disruption in piped gas supply
• Fuel risks are being mitigated by:
• Gas generation units have dual-fuel capability and access to
two sources of piped gas
• Government has made a decision to import LNG from 2012
to diversify supply options and develop a storage capability
15
Privitisation
• The three largest ‘Gentailers’ are government owned
• Privitisation of these assets is under consideration, with
media reports suggesting that sale may be imminent
• Ownership changes are likely to change market dynamics
16
Conclusion
• The market is:
• working well – prices respond to changes in demand and
supply conditions and reflect changes in input costs
• 3 ½ years old and generally supported by the industry
• well positioned for future development and evolution
17