Incentive scheme to spur innovative approaches and capability

(SINGAPORE) The government is giving the renewable energy sector a push amid soaring oil prices, by setting aside more than $20 million for the Solar Capability Scheme, the Minister of State for Trade and Industry S Iswaran announced yesterday.

In a bid to diversify sources of energy, this grant-based incentive is meant to spur more innovative approaches and capability development, in the architecture, design and system integration of solar panels as part of green buildings.

The fund will go towards offsetting part of the installation cost of solar panels for new buildings which attain a certain level of Green Mark standard. The Economic Development Board will be releasing more details of this scheme in due course, Mr Iswaran told the House yesterday.

In view of the global nature of energy issues, the government has also decided to set up an International Advisory Panel on Energy, which will be chaired by Mr Iswaran and consist of thought-leaders, eminent persons, and energy experts. The group will meet for the first time this November, which would coincide with the first International Energy Week, which will include a Singapore Energy Conference.

'Energy security has re-emerged as a growing concern for many countries, not just Singapore,' Mr Iswaran said.

Some members of parliament yesterday raised concerns over high energy prices and its impact. Singapore is a price taker as it depends fully on imports for its energy needs. The government's basic policy tenet has been that energy costs should be borne in full by end users because subsidies will create price distortions and the incentive to over-consume.

As subsidies are not sustainable in the long run, the government encourages competition which would exert a downward pressure on prices. Since competition was introduced in the electricity market in 2001, electricity tariff for low tension users - mainly households - only increased by 14 per cent although fuel prices more than doubled over the past seven years.

Mr Iswaran said he is hence not in favour of suggestions by some MPs to provide subsidies to solar energy in the form of feed-in tariffs, but rather allocate resources to R&D and test bedding to develop technologies that will bring down the cost of generating alternative energies.

To cope with intensifying global competition for resources, Mr Iswaran said the government's response has to be on two fronts. On the demand side, more efficient and innovative use of energy is required, and in this aspect, the Ministry of the Environment and Water Resources outlined its efforts last week.

On the supply side, Singapore needs to diversify its sources of energy and continuously explore new fuel and energy technologies. To this end, the government has decided to import liquefied natural gas (LNG) to reduce its vulnerability to possible supply disruptions as some three- quarters of Singapore's electricity is generated using piped natural gas.

'We are currently in the final stages of liberalising the gas market and that will further enhance competition in our energy sector, Mr Iswaran said. He informed the House that Singapore's efforts to import LNG are on track.

PowerGas, the owner and operator of the gas pipeline network in Singapore, was designated the LNG terminal operator last September and the Energy Market Authority is now in the final stages of a request for proposal (RFP) process to select the LNG 'aggregator', which will consolidate demand from end-users, and import LNG into Singapore. The outcome of this RFP process will be announced in the second quarter of this year.

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