SINGAPORE: More energy-intensive firms in Singapore are cutting their power use during peak periods, as part of a scheme that rewards them for doing so when demand and prices are high.
The Energy Market Authority (EMA) said participation in its demand response programme has grown from four businesses in 2023 to 16 this year.
The number of service providers – which act as intermediaries between the power grid and businesses – has also doubled from three to six.
The scheme allows companies with heavy energy needs – such as manufacturers – to reduce electricity use when the grid is under stress. In return, they receive payments for reducing usage during these periods.
Electricity consumption cuts under the programme have reached 167 megawatts (MW) – enough to power about 300,000 four-room HDB flats for an hour.
HOW THE PROGRAMME WORKS
Demand response is designed to ease pressure on the power grid and can result in more stable electricity prices, says the EMA.
Firms can sign up via electricity retailers or aggregators. Those who can offer to reduce their power consumption by at least 0.1MW can also join the scheme directly.
Businesses commit in advance how much electricity they can cut during periods of high demand by bidding into the wholesale market.
When prices rise or supply tightens, EMA activates these bids, and participating firms reduce consumption to ease pressure on the grid.
Participants can either adjust operations – for instance, by temporarily switching off non-critical equipment – or rely on alternative power sources such as batteries or back-up generators.
In exchange, they receive incentive payments when activated. These payments can go up to S$4,500 (US$3,500) per megawatt-hour – the ceiling for electricity prices in Singapore’s wholesale market.
Firms will receive no payouts for partial delivery and may face financial penalties if they fall below an 80 per cent compliance threshold – the minimum required level of load reduction.
They may also face investigation for persistent underperformance and risk suspension after repeated under-delivery.