Information Paper: Policy on Self-Supply of Electricity

Meta Data

Draft:

Revision of previous policy?:

Yes

Effective Start Year:

2008

Scope:

National

Document Type:

Overarching Policy, Other

Economic Sector:

Power

Energy Types:

Power

Issued by:

Energy Market Authority of Singapore

Source:

Energy Market Authority

File:

Policy on Self-Supply of Electricity

Overall Summary:

An overview of the revised rules around self-supply of electricity.

Investment

Independent power producers:

A company is allowed to embed generation, provided the generating units are located on land which is contiguous to the load facilities and is on land majority owned by the same company. However the company is not allowed to export electricity into the power grid, should the company choose to contravene this it will be treated as a genco and will not be given net treatment for non-reserve market charges. A company may install embedded generating units on land that is non-contiguous with its load facilities and/or outsource the units by engaging third parties to develop, own and operate the units, provided that there is no insufficient contiguous land available for the company to accommodate the units and load facilities, or the units could be located on land that is non-contiguous with the load facilities. Under this critieria the load facilities and land on which the load facilities and embedded generating units are located must be majority owned by the same company, there must be point-to-point electrical connection between the units and load facilities, and there cannot be any export of electricity generation from the embedded units into the power grid. However, EMA will not allow outsourcing of embedded generating units to a company if this creates market power or adds to existing market power of the company. Additionally, the current electricity licensing regime, Market Rules and relevant codes of practices will continue to apply to embedded generating units that are outsourced and/or located on non-contiguous land to ensure level playing field and safeguard system security and reliability.

Full Document Text

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INFORMATION PAPER

POLICY ON SELF-SUPPLY OF ELECTRICITY

DATE ISSUED: 21ST APRIL 2008 ENERGY MARKET AUTHORITY

111 Somerset Road #15-05

Singapore 238164

www.ema.gov.sg

For any enquiries on this document, please email to: [email protected]

DISCLAIMER

The information in this document is subject to change, to adapt to the continual development and evolvement of the electricity industry and is not a substitute for any law, regulation, code of practice, standard of performance or Market Rules which may apply to the electricity industry in Singapore. It does not in any way bind the Energy Market Authority to grant any approval or official permission for any matters, including but not limited to the grant of any exemption nor to the terms of any exemption.

The Energy Market Authority reserves the right to change its policies and/or to amend any information in this document without prior notice. Persons who may be in doubt about how the information in this document may affect them or their commercial activities are advised to seek independent legal advice or any other professional advice as they may deem appropriate. The Energy Market Authority assumes no responsibility or liability for any consequences (financial or otherwise) suffered directly or indirectly by persons who have entered into commercial activities upon reliance on any information in this document.

Background

1. The current policy on self-supply of electricity (put in place since Apr 02) allows a company to embed generation i.e. install generating units for its own use provided:

(a) the generating units are located on land that is contiguous with the company’s load facilities; and

(b) the generating units, load facilities and land are majority (i.e. at least 50%) owned by the company.

2. EMA has revised the rules under the current policy after conducting a public consultation. This Information Paper sets out the revised rules.

Considerations

3. The original set of rules under the current policy requires a company’s embedded generating units to be located on land that is contiguous with its load facilities, and the embedded generating units, load facilities and land to be majority owned by the company. The company is not allowed to export electricity into the power grid and is given net treatment for non-reserve market charges. If the company chooses to export electricity into the power grid, it will be treated as a commercial generation company (“genco”) and will not be given net treatment for non-reserve market charges.

4. In land-scarce Singapore, it is not always possible or practical for a company to find a contiguous piece of land to accommodate both its generating units and load facilities. There would be instances where the generating units and load facilities have to be separated by roads, drains, canals or other encumbrances.

5. The company may also find it commercially optimal to outsource its embedded generating units by engaging third parties to develop, own and operate the embedded generating units for the company’s own use. This would distort market competition unless EMA re-calibrates the rules under the current policy.

Revised Rules Under the Policy on Self-Supply of Electricity

6. On the above considerations, EMA has revised the rules under the current policy on self-supply of electricity as follows:

(a) A company is allowed to embed generation, i.e. install generating units to generate and supply electricity directly to its load facilities provided:

(1) the embedded generating units are located on land which is contiguous to the load facilities; and

(2) the embedded generating units, load facilities and land are majority (i.e. at least 50%) owned by the same company. The company is not allowed to export electricity into the power grid. If the company chooses to export power into the power grid, it will be treated as a commercial genco and will not be given net treatment for non-reserve market charges.1

(b) Subject to the following conditions, the company may install the embedded generating units on land that is non-contiguous with its load facilities and/or outsource the embedded generating units by engaging third parties to develop, own and operate the embedded generating units:

(1) Provided there is no or insufficient contiguous land available for the company to accommodate the embedded generating units and load facilities, the company may locate the embedded generating units on land that is non-contiguous with the load facilities;

(2) The load facilities and the land on which the load facilities and embedded generating units are located (i.e. including the non-contiguous land if applicable) must be majority owned by the same company;

(3) There is a point-to-point (i.e. dedicated) electrical connection between the embedded generating units and load facilities; and

(4) There is no export of electricity generated from the embedded generating units into the power grid.

7. However, EMA will not allow outsourcing of embedded generating units to a company if this creates market power or adds to existing market power of the company.

8. The current electricity licensing regime, Market Rules and relevant codes of practices will continue to apply to embedded generating units that are outsourced and/or located on non-contiguous land to ensure level playing field and safeguard system security and reliability.

* * *

Introduced in Aug 06, the net treatment of embedded generators for non-reserve market charges is

set out in the Information Paper entitled “Net Treatment of Embedded Generators” which is available

at EMA’s website: www.ema.gov.sg