Energy Transition Measures and Other Amendments Bill Introduced in Parliament to Enhance Safeguards for Energy Market and Establish Future Energy Fund

On 6 August 2024, the Energy Transition Measures and Other Amendments Bill (“Bill“) was introduced for First Reading in Parliament, and was passed on 9 September 2024. The Bill will amend the Energy Market Authority of Singapore Act 2001 (“EMA Act“), Electricity Act 2001 (“Electricity Act“), and Gas Act 2001 (“Gas Act“). The Bill has three main aims, namely to (i) introduce guardrails for Singapore’s electricity market; (ii) strengthen the Energy Market Authority’s (“EMA“) ability to regulate the power sector; and (iii) introduce the Future Energy Fund (“FEF“). The proposed amendments introduced by the Bill are necessary as Singapore aims to decarbonise the power sector as a necessary step towards achieving its net-zero target by 2050.

The introduction of the Bill follows a public consultation exercise conducted by the Ministry of Trade and Industry (“MTI“) and EMA that ran from 8 May to 5 June 2024. Learn more about the public consultation exercise and response issued by MTI and EMA in our earlier NewsBytes articles listed below.

Key features of the Bill include:

1. Creation of the FEF under EMA. The Government will establish the FEF under EMA, with an initial fund of S$5 billion. The FEF will support Singapore’s adoption of low-carbon energy sources. MTI and EMA have indicated that energy transition infrastructure which could be supported by the FEF include undersea cables to import low-carbon electricity, and new hydrogen terminals and pipelines if Singapore decides to adopt and scale up the use of hydrogen. Further, the infrastructure will need to meet the Government’s goals of sustainability and long-term economic competitiveness, while continuing to safeguard Singapore’s energy security.
   
   
2. Establishing a regulatory regime for centralised gas procurement. MTI and EMA propose to establish a Central Gas Entity (“CGE“) to aggregate the demand for gas from power generation companies and centralise gas procurement for the power sector. The Electricity Act and the Gas Act will be amended to (i) empower EMA to regulate the CGE; and (ii) introduce the requirement for power generation companies to procure gas solely from the CGE. Legacy gas contracts will not be affected. 
   
   
3. Allowing EMA to recover costs for energy security, market development and decarbonisation-related initiatives. During the energy transition, EMA may have to implement new initiatives to (i) strengthen energy security; (ii) develop a competitive market; and/or (iii) support the decarbonisation of the power sector. The proposed amendments to the Electricity Act and the Gas Act will allow EMA to recover costs of providing these initiatives from the entities and persons who benefit from these initiatives.
   
   
4. Facilitate shared access to critical energy infrastructure. The amendments to the Electricity Act and the Gas Act will allow EMA to direct owners of critical energy infrastructure to enter an agreement with licensees to provide access to critical energy infrastructure. EMA will only issue such directions if such access is in the public interest to ensure energy security and reliability.
   
   
5. Require owners of key electricity and gas assets to seek approval when repurposing assets. Given the energy transition, owners of existing energy infrastructure may wish to repurpose such infrastructure for other uses. The proposed amendments to the Electricity and the Gas Act will require owners of key electricity and gas assets to seek EMA’s approval before repurposing such assets. Electricity and gas assets refer to installations that provide electricity and gas supplies (e.g. power generation units, transmission cables and gas pipelines). When assessing repurpose requests, EMA aims to strike a balance between owners’ commercial needs and ensuring that energy security and system reliability will not be compromised. Electricity and gas asset owners can appeal to the relevant Minister for a review of EMA’s decision.
   
   
6. Empower EMA to implement power rationing during emergencies. The proposed amendments to the Electricity Act will equip EMA with powers to direct licensees and consumers to ration power so that it can maintain the stability of the power system during emergencies where electricity supply is disrupted. Before power rationing is implemented, EMA will notify affected parties. During power rationing, critical needs and essential public services will be prioritised. EMA will not provide compensation to affected parties as power rationing is a necessary measure to stabilise the system during an emergency.

Click on the following links for more information:

• Energy Transition Measures and Other Amendments Bill (available on the Parliament Singapore website at parliament.gov.sg)
• MTI Press Release titled “Introduction of Energy Transition Measures and Other Amendments Bill” (available on the MTI website at mti.gov.sg)
• MTI and EMA Press Release titled “Establishment of Future Energy Fund to Support Singapore’s Infrastructure Investments” (available on the EMA website at ema.gov.sg)
• May 2024 Rajah & Tann NewsBytes article titled “MTI and EMA Consult on Proposal to Update Regulatory Regime for the Energy Markets and Infrastructure to Move Towards Decarbonisation of the Power Sector”
• June 2024 Rajah & Tann NewsBytes article titled “MTI and EMA to Proceed with Updating the Energy Market Regulatory Regime with a View to Decarbonising the Power Sector”