SINGAPORE (Reuters) – A sharp rise in Singapore’s spot electricity prices amid a global power crunch has been exacerbated by reduced gas supply from neighbouring Indonesia, the city state’s Energy Market Authority said on Friday.
Natural gas prices in Asia and Europe have surged to record highs this month amid tight supply and increased demand for winter which has in turn led to higher power prices in many countries and caused at least two energy providers in Singapore to exit the market.
Spot electricity prices in the Singapore Wholesale Electricity Market fluctuate every half-hour depending on prevailing demand and supply conditions, EMA said in an e-mailed response to Reuters’ query.
“The recent spike in Uniform Singapore Energy Price could be attributed to a number of factors, including higher than usual electricity demand, the outage of several generation units, curtailments of gas from West Natuna, as well as low landing pressure of the gas supplied from South Sumatra,” the regulator said.
Power generation companies typically switch from piped natural gas to alternative fuel sources such as liquefied natural gas (LNG) or diesel should gas pressure drop below certain levels, it added.
“This ensures that power supply remains stable and reliable during such low-pressure situations,” EMA said, adding that it is working with the industry, including power generation companies, to ensure sufficient generation capacity and gas supply in the system.
Indonesia’s upstream oil and gas regulator SKK Migas did not immediately reply to a request for comment.
State-owned Singapore LNG Corp (SLNG), which owns and operates the city-state’s sole liquefied natural gas (LNG) terminal has been scouting for LNG cargoes in a rare move, Reuters reported earlier this week.
SLNG, whose terminal supplies up to 30% of the city state’s natural gas demand for power generation, said on Thursday it is exploring options to increase inventory of LNG at its terminal given tight global LNG supplies.
Singapore’s monthly base load electricity futures have surged by more than double since the start of the month while the quarterly base load electricity energy futures are trading at their highest since the contract was launched in 2015.
The spike in electricity prices has caused two energy providers to exit the market while three others have stopped accepting new customers, Reuters reported on Thursday.
The majority of Singapore’s supply of natural gas come from pipelines from Indonesia and Malaysia while the rest are imported as LNG through long-term contracts. About 95 per cent of Singapore’s electricity is currently generated using natural gas.
Singapore’s long-term piped gas contracts with Indonesia start expiring from 2023, when the country has plans to import more LNG from the global market.