1

Allan H. DawsonChief Executive Officer

Energy Market Company, Singapore

Evolution in the National Electricity Market of Singapore

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Agenda

Reform Milestones Singapore an earlier adopter Why the NEMS? Industry Structure Market Design NEMS Performance Future Evolution

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Reform Milestones 1995

1998

1999

2000

2001

2002

2003

Singapore Power formed, Oct 1995

Wholesale electricity pool commenced, Apr 1998

Government review of electricity industry, Sep 1999

Government decision on further deregulation, Mar 2000

Energy Market Authority formed, Apr 2001

Energy Market Company formed, June 2001

All consumers contestable, 2003 / 2004

New Electricity Market commenced on 1 Jan 2003

PHB Hagler Bailly (later PA Consulting) designs wholesale market, Aug 2000

Planned

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Singapore an early adopterSingapore Electricity Pool Singapore Electricity Pool (SEP) was a cost-

based day-ahead market Designed in 1994, SEP was implemented in

1998 International thinking on market design

progressed significantly between design and implementation

SEP was a useful way of transitioning to a more dynamic and complex market

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Why the NEMS? Designed to promote the supply of

competitively priced electricity Open up the retail market to full competition Allow certain government assets to be

privatized Encourage private investment in Singapore’s

power system infrastructure

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Industry StructureSenoko

Power LtdTuas

Power LtdPower

Seraya LtdNEA SembCorp

Power Grid Ltd

Regulator

SystemOperator

Market Operator(EMC)

Non-Contestable Customers

Contestable Customers

ElectricityRetailers

Power Supply Ltd

ElectricityRetailers• Keppel FELS

Energy Supply Pte LTd

• SembCorp Power Pte Ltd

• Senoko Energy Supply Pte Ltd

• Seraya Energy Pte Ltd

• Tuas Power Supply Pte Ltd

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Industry StructureTENAGA

NASIONAL BERHAD

SENOKO PS

SERAYAPS

JURONG ISLAND

TUASPS

SEMBCORP COGEN

SembCorp Cogen:• Total Installed Capacity = 785 MW• Authorised Generation Capacity = 900 MW • No. of Combined Cycle Plants = 2

Seraya PS: • Total Installed Capacity = 3,100 MW• Authorised Generation Capacity = 3,100 MW •No. of Combined Cycle Plants = 2 • No. of Steam Units = 9• No. of Gas Turbine Units = 4• Total no. of Units = 15

Tuas PS:• Total Capacity Installed = 1,934 MW• Authorised Generation Capacity = 2,670 MW• No. of Combined Cycle Plants = 2• No. of Steam Units = 2• Total no. of Units = 4

Senoko PS:• Total Installed Capacity = 2,655 MW• Authorised Generation Capacity = 3,300 MW• No. of Combined Cycle Plants = 3• No. of Steam Units = 5• No. of Gas Turbines = 2• Total no. of Units = 10

(Some data are extracted from EMA Brochure, Mar 02)

TENAGA NASIONAL BERHAD

SENOKO PS

SERAYAPS

JURONG ISLAND

TUASPS

SEMBCORP COGEN

SembCorp Cogen:• Total Installed Capacity = 785 MW• Authorised Generation Capacity = 900 MW • No. of Combined Cycle Plants = 2

Seraya PS: • Total Installed Capacity = 3,100 MW• Authorised Generation Capacity = 3,100 MW •No. of Combined Cycle Plants = 2 • No. of Steam Units = 9• No. of Gas Turbine Units = 4• Total no. of Units = 15

Tuas PS:• Total Capacity Installed = 1,934 MW• Authorised Generation Capacity = 2,670 MW• No. of Combined Cycle Plants = 2• No. of Steam Units = 2• Total no. of Units = 4

Senoko PS:• Total Installed Capacity = 2,655 MW• Authorised Generation Capacity = 3,300 MW• No. of Combined Cycle Plants = 3• No. of Steam Units = 5• No. of Gas Turbines = 2• Total no. of Units = 10

(Some data are extracted from EMA Brochure, Mar 02)

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Market Design

Generation Companies

RetailCompanies

ContestableCustomers

Non-Contestable Customers

Direct MarketParticipants

SPL - DefaultSupplier

PowerGridPSO

textEMAElectricity Act Market Rules Market Codes

NATIONAL ELECTRICITY MARKET OF SINGAPORE

WholesaleMarket

RetailMarket

RegulatoryFramework

Financial Flows

Energy Flows

Dispatch Information

Legend

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Market Design Real-time market spot market for energy,

regulation and 3 classes of reserve Mandatory participation Cooptimization between energy, reserve and

regulation

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Market Design Ex ante pricing Locational marginal (nodal) prices at 33

injection nodes and 350 off-take nodes Generators receive nodal spot price Customers pay Uniform Singapore Electricity

Price Daily settlement

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NEMS Performance Competitive pressure in the energy, reserve

(most notably) and regulation markets Prices move with fundamentals (oil prices,

generator outages etc) Increasing dominance of gas-fired generation Stakeholders appear satisfied with the first 10

months of operation

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NEMS PerformanceWholesale Energy Prices

0

20

40

60

80

100

120

140

160

180

1-Jan

8-Jan

15-Jan

22-Jan

29-Jan

5-Feb

12-Feb

19-Feb

26-Feb

5-Mar

12-Mar

19-Mar

26-Mar

2-Apr

9-Apr

16-Apr

23-Apr

30-Apr

7-May

14-May

21-May

28-May

4-Jun

11-Jun

18-Jun

25-Jun

2-Jul

9-Jul

16-Jul

23-Jul

30-Jul

Trading date

$/MWhNEM ($/MWh) for 2003 SEP ($/MWh) for 2002

7 Day Mov. Avg. (NEM ($/MWh) for 2003) 7 Day Mov. Avg. (SEP ($/MWh) for 2002)

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NEMS PerformanceWholesale Reserve Prices

0.00

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

3,000,000.00

1-Jan

8-Jan

15-Jan

22-Jan

29-Jan

5-Feb

12-Feb

19-Feb

26-Feb

5-Mar

12-Mar

19-Mar

26-Mar

2-Apr

9-Apr

16-Apr

23-Apr

30-Apr

7-May

14-May

21-May

28-May

4-Jun

11-Jun

18-Jun

25-Jun

2-Jul

9-Jul

16-Jul

23-Jul

30-Jul

($ Mil) SEP Reserve Cost NEM Reserve Cost

7 Day Mov. Avg. (SEP Reserve Cost) 7 Day Mov. Avg. (NEM Reserve Cost)

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NEMS Performance

SEP Generation Composition (Jan to Jul 2002)

38.8%

58.2%

3%

STCCGT

(OTHERS)

Source: Energy Market Company Pte Ltd

NEMS Generation Composition (Jan to Jul 2003)

37.7%

3.0%

59.4%

(OTHERS)

Source: Energy Market Company Pte Ltd

STCCGT

Dominance of gas-fired generation

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Further Evolution

Market rules change panel has supported over 100 rules changes

Most changes were in preparation for market commencement to make the rules workable

EMC administers the rules change panel Critical that the market continues to evolve so

that ‘big bang’ implementations are avoided

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Further Evolution

Key market design issues likely to be considered in the next 2 years Interruptible load participation in the reserve

market Market re-settlement Transmission planning and augmentation Financial transmission rights

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Summary

Singapore has come a long way in the liberalisation of its electricity market

Evolution is important as NEMS performance directly impacts on Singapore’s economy

Singapore will remain at the forefront of market reform

EMC is excited to play a key role in the evolution and success of the NEMS