Round Up Speech by 2M Tan See Leng at the Second Reading of the Energy (Resilience Measures and Miscellaneous Amendments) Bill

1. Mr Speaker, I thank the Members who have spoken in support of the Bill.

2. Members have raised very good clarifications and suggestions which fall into four broad categories:

a. The first category on energy security and resilience, including the amendments to enable EMA to build, own and operate critical power infrastructure;

b. Second, the amendments to enhance protection of critical electricity and gas infrastructure;

c. Third, provisions to reduce greenhouse gas emissions and enhance the environmental sustainability of the energy sector; and

d. Finally, the impact of the energy transition on electricity prices

3. Now before I address these issues, I would like to thank Mr Melvin Yong, Mr Gerald Giam, Mr Desmond Choo, Mr Liang Eng Hwa and Mr Shawn Huang, for their questions and suggestions about the Open Electricity Market (OEM).  As I mentioned yesterday, the OEM remains viable but safeguards may need to be strengthened. We are very, very mindful of the higher electricity bills that households and businesses will be facing. Today, households living in 1 – 2 room HDB flats typically benefit from GSTV U-Save rebates amounting to an average of about 3 – 4 months of their utility bills. Together with the GSTV U-Save Special Payments, these households will receive rebates equivalent to about 4.5 to 6 months of their utility bills this year. I have also addressed this in yesterday’s PQ reply for the questions that we received. We will also work with MOF to assess and review if more support is needed. My Ministry and EMA will study this closely and we will provide further updates when ready.

Energy Security

4. Let me now address the first key issue on energy security. Mr Saktiandi Supaat and Mr Gerald Giam asked about the measures to enhance the security and resilience of our energy supply.  During Question Time yesterday, I spoke at length about the actions that Singapore is taking to safeguard our energy security amidst the ongoing global energy crisis.  I will now touch on how we can ensure energy security over a longer term.

5. First, diversification in energy sources. From 2013, we have supplemented Piped Natural Gas (PNG) with imported Liquefied Natural Gas (LNG). We have been ramping up solar energy production locally from this year, and are now one of the most solar-dense cities in the world. However, this alone will not be sufficient to meet our energy needs. Based on a study conducted by Solar Energy Research Institute of Singapore (SERIS), Singapore has a maximum solar potential of 8GWp by 2050, and I do not think we can wait until 2050. Even if we are able to harness all of that maximum solar potential, it will only roughly provide 10% of our future energy needs. Therefore, regardless of the measures we take to boost solar power deployment, we will have to import renewable electricity from the region. We are also developing and trialling new low-carbon alternatives like hydrogen, as options for the longer term. And I will speak and elaborate more on this later.

6. Second, beyond diversifying the types of energy that we use, we will also diversify the geographical sources of energy to manage our political and security risks. This will be an important consideration in EMA’s RFP or request for proposals for electricity imports. Ms Cheryl Chan asked about the impact of Malaysia’s ban on renewable energy exports to Singapore. Singapore lies in a region that has abundant renewable energy potential.  For example, Indonesia has geothermal and solar power potential. Thailand, Vietnam and Lao PDR also have good wind and hydropower potential. Beyond that, Australia is also a possible source.  We welcome all companies which are keen to collaborate on the development of renewable energy sources to participate in the Energy Market Authority’s Requests for Proposal for electricity imports.

7. Third, on backup supply. Every source of energy has a risk of disruption. Currently, power generation companies (‘gencos’) are required to stockpile at least 60 days of fuel reserves, in the event of disruptions to our natural gas supply.  When we start to import electricity and harness more solar energy, we will also need to have sufficient amounts of other types of backups, including energy storage systems and generators.

8. We plan to work with the private sector to build the necessary infrastructure to diversify and secure our energy supply. However, as Mr Liang Eng Hwa pointed out, what we need may not be what private investors are able or willing to provide. Should this happen, we must be prepared to provide the infrastructure to ensure energy security and reliability for ourselves. Thus, we are moving legislation to empower EMA to acquire, to build, to own and/or operate critical infrastructure. This is a very important and critical point. Let me now address some of the specific issues that Members have raised about the scope of these powers.

a. Mr Desmond Choo, Mr Saktiandi Supaat, Mr Gerald Giam, Mr Abdul Samad, Mr Melvin Yong, and Ms Janet Ang have asked how EMA intends to level the playing field between private investments and those that are built, own and/or operated by EMA. For a start, EMA will ensure that these infrastructures are subject to the same stringent standards and requirements as their private counterparts. EMA will put in place governance structures, and if necessary, separate subsidiaries to mitigate conflicts of interest and ensure accountability. Nevertheless, I would like to reiterate that our preference has been and continues to be for the private sector to provide and operate the critical infrastructure. We remain committed to facilitating private sector investments in the energy sector.

b. I agree with Mr Shawn Huang that these amendments must benefit the business and household consumers. In the event that EMA needs to intervene and provide the critical infrastructure and services needed, EMA will coordinate closely with industry stakeholders to avoid duplicative investments.

c. Ms Cheryl Chan asked if there are particular aspects that we will focus on to enhance the resilience of our energy sector. The energy sector is a complex network of integrated systems. Every component will need to function well to keep the lights on. Besides ensuring access to energy sources, we also need to progressively upgrade and enhance our grid infrastructure to support rising electricity demand and a more complex power system with diverse and distributed sources of low-carbon energy. EMA is working closely with SP Group to develop a digital twin of Singapore’s physical electricity grid, which will make the transmission and distribution more accurate and efficient. We are also conducting testbeds on microgrids to assess their feasibility and ability to enhance our grid resilience.

9. Mr Louis Ng has pointed out other threats to energy security, such as cybersecurity and foreign influence. My Ministry, and EMA, are fully aware of these risks and we have put in place safeguards to address them.

10. On the cyber-health of our energy system:

a. There have not been any successful cyberattacks on Singapore’s critical energy installations thus far, but we are not resting on our laurels. EMA has detected a few spoofing and phishing attempts targeting companies in the Energy Sector in the past few years, but these attacks were on IT and Non-Critical Information Infrastructure (Non-CIIs) networks. The spoofing and phishing attempts were also quickly contained and addressed. The operation of critical infrastructure such as our gas and electricity systems, facilities, plants and equipment were not affected.

b. Nonetheless, we are not resting on our laurels and we take cybersecurity threats very seriously.

i) The Electricity and Gas Acts and the Computer Misuse and Cybersecurity Act give EMA and the Cyber Security Agency (CSA) the mandate to address cyber security threats.

ii) EMA has developed a cybersecurity governance framework for the energy industry, in partnership with the CSA. Under this framework, the energy industry’s Critical Information Infrastructure Owners (CIIOs) are required to meet minimum baseline cyber requirements such as isolating computer systems from the Internet. Any cyber incidents must be reported to EMA and CSA within 2 hours, which ensures that remedial efforts can be carried out in a timely manner. This is in line with the reporting requirements for government agencies with critical infrastructure.

iii) EMA also organises regular industrywide exercises and sharing sessions to ensure the sector’s resilience and readiness in emergency responses to cyber-attacks. EMA will continue to work with CSA and the industry to ensure the robustness, the relevance of our cybersecurity governance framework.

c. This is the same for our water supply infrastructure, with a clear framework and regular exercises in place.

11. On foreign influence through financing, EMA will ensure that the expanded borrowing powers to issue bonds do not compromise the security of our energy system. As a general principle, any borrowing by EMA to fund energy infrastructure will not be securitised to the asset.  When entering into loan agreements with financial institutions, EMA will also ensure that lenders do not have the ability to influence decisions relating to the energy infrastructure.

Protection of critical electricity and gas infrastructure

12. Let me now address some of the specific issues that Mr Edward Chia has raised on the amendments to enhance the protection of critical electricity and gas infrastructure.

a. The Bill will make it an offence to damage protective infrastructure housing transmission electricity cables that are 66kV (kilovolts) and above. These are high voltage transmission cables that serve more consumers. Damages to these cables will thus have a greater impact on our electricity supply to consumers and businesses.

b. This Bill also clarifies the existing role of SP Services Ltd, the market support services licensee/provider, in carrying out safety inspections of electrical installations in premises to ensure safe and continued operation. This includes testing to confirm that the devices operate as intended and ensuring that the electrical socket outlets are not installed near any water point. The inspections are arranged by the Licensed Electrical Worker engaged by the owner of the premises, with the consent of the owner of the premises.

Environmental Sustainability

13. Several Members have also spoken about the importance of ensuring the environmental sustainability of the energy sector. We agree that this is very important and we are committed to decarbonising the power sector. Enabling EMA to require licensees to reduce greenhouse gas emissions is an important step. In response to Mr Liang Eng Hwa’s suggestions, EMA will use a combination of broad-based regulatory measures and targeted support measures to encourage the whole industry to decarbonise.

14. Mr Louis Ng and Ms Nadia Samdin asked about our timelines for imposition of new greenhouse gas emissions standards.The first iteration of the proposed measures may be released for public consultation as early as next year (i.e. 2022).  In developing greenhouse gas emissions standards, EMA will ensure that these standards are reasonable and realistic, but they are also ambitious. Companies will be given time to transition.  The public can monitor our progress in decarbonising the power grid via the Grid Emissions Factor (GEF) report, which EMA publishes on its website every year.

15. Mr Desmond Choo and Mr Melvin Yong asked about incentives to encourage the adoption of more energy and carbon efficient technologies. Under EMA’s First Energy Efficiency Grant for Power Generation Companies, $37 million were awarded to 4 Gencos to adopt energy efficient technologies and equipment to reduce their carbon emissions. When completed, these projects are expected to reduce carbon emissions by over 48 kilo tonnes per annum. This is equivalent to taking about 15,000 cars off the roads annually. Earlier this year, EMA launched the second grant call.  EMA will review and calibrate the level of grants based on the carbon abatement potential of the projects.

16. But all of these efforts alone are not sufficient. We will need to continue to explore new energy solutions to meet our long-term energy needs and low-emissions target.  Ms Cheryl Chan, Ms Janet Ang, Mr Shawn Huang and Mr Saktiandi Supaat asked about our efforts to develop low-carbon alternatives such as carbon capture, utilisation and storage capabilities, hydrogen and nuclear technologies.

a. The Government is investing heavily in research and development efforts, and collaborating with like-minded international partners, to understand the potential for deploying these low-carbon technologies. In reply to Mr Liang Eng Hwa, our current assessment is that hydrogen will only be commercially viable around 2040.  However, many countries are investing heavily in lowering the cost of producing, transporting, storing and using hydrogen. So, its viability may well come sooner.  MTI and EMA are also actively exploring low-carbon sources of energy which can be produced in Singapore, including geothermal energy, and accelerating the deployment of solar energy, notwithstanding the limited potential that we have.

b. As for nuclear energy, while there have been advancements in nuclear reactor technologies which have the potential to improve the safety of nuclear generation, many of these are in the research and development phase and they have not begun commercial operations. We will continue to monitor the progress of these technologies, while also strengthening our capabilities to understand nuclear science and technology to assess the implications for Singapore. 

17. We will need to carefully calibrate our transition to manage its impact on energy security and reliability.  At the same time, we will also need to press on with our energy conservation efforts and find ways to use energy more efficiently. I would like to thank Mr Edward Chia for his many insightful suggestions.  We will consider these carefully.

18. Besides technologies and systems, another critical ingredient for the energy transition is human capital. Mr Saktiandi Supaat would be pleased to hear that EMA has been updating and strengthening its capabilities to keep pace with the changing energy landscape over the years, through capability sharing platforms with industry stakeholders and foreign regulators. EMA is also working closely with the Union of Power and Gas Employees to implement upskilling and reskilling courses, to empower the workforce with the necessary skills required to support the transition. I am heartened to hear from Mr Abdul Samad that these courses and programmes have been well received.

Electricity Costs

19. Mr Saktiandi Supaat and Mr Desmond Choo have also raised concerns about electricity costs associated with the energy transition, including for electricity imports.  While the cost of generation may be lower, infrastructure enhancements in the form of additional landing sites, subsea interconnections, backup and grid enhancements will add to overall costs. This is an inevitable and necessary trade-off to address climate change. EMA will continue to work closely with industry partners to explore and develop cost-competitive and secure solutions that will meet both our long-term energy needs and low-emissions targets.  At the same time, the Government will continue to provide targeted support for vulnerable households to help them cope with higher electricity costs.

Conclusion

20. Mr Speaker, our energy market has served us well for the last twenty years.  I would like to echo Mr Abdul Samad’s appreciation for the hard work and dedication shown by the Brothers and Sisters in the power sector.  My colleagues and I remain committed to building on this strong foundation, working closely with our industry and union partners.

21. I would like to thank the Members for speaking on this Bill, and for the valuable comments provided. This Bill will ensure that the EMA, Electricity and Gas Acts continue to remain relevant and effective, empowering EMA with the necessary levers to navigate the energy transition while safeguarding Singapore’s energy security,       reliability and affordability.

22. Sir, I beg to move.