Power spikes are cost of clinging to past in S’pore

Think the cost of electricity in Europe — where fuel shortages and the approach of winter recently drove prices over $200 per megawatt-hour — is crazy? You should check out Singapore.
The city-state has seen wholesale prices rising as high as S$2,947 ($2,184)/MWh in October and $1,121/MWh last month. Those levels aren’t even particularly unusual in Singapore’s highly liberalised power market, where costs spike whenever supply and demand fall out of alignment.
While most households pay the fixed government tariff of S$241/MWh, a few that have signed up to prices linked to the wholesale market have been spending extraordinary amounts. At October’s peak, it would cost $5 or more to run a typical oven for an hour. In Europe and China, the volatile price of grid energy in recent months has often been presented as an outcome of decarbonisation.
“The world is facing an ever more chaotic energy transition,” Saudi Arabian Oil Co Chief Executive Officer Amin Nasser told an energy conference in Houston, warning of “energy insecurity, rampant inflation, and social unrest” if investment in fossil fuels wasn’t stepped up.
That’s clearly not what’s happening in Singapore, one of the most intensively fossil-fired economies on the planet. Around 95% of electricity is provided by gas turbines, with coal and fuel oil making up another 2% or so. Waste incinerators account for a substantial slice of the remainder, leaving renewable solar and biomass with just 1% or so of generation, next to 47% in Germany and 83% in Brazil.
Instead, it’s a sign of an economy that’s unusually exposed to volatile fuel prices, the same dynamic that’s making power costly in Europe and China, and one thing that a shift toward fixed-tariff renewables ought to alleviate. That transition will be difficult in Singapore, however, because its energy market is an outgrowth of a unique geographic and political situation. About three-quarters of the country is urban and industrial land, meaning there’s simply too little space for large-scale solar or nuclear generation. Wind speeds are slow and water catchments tiny, knocking out wind and hydro, too.
Its relations with neighbors Indonesia and especially Malaysia veer between the cordial and prickly, but the continuing existence of mandatory national service illustrates how nervous the country remains about security.

—Bloomberg