Singapore poised to take lead in global clean energy stakes

Jessica Cheam, Straits Times 5 Nov 07:
EDB maps out five-pronged strategy to spur sector's growth;

WITH oil prices close to hitting US$100 a barrel, the world may soon have to embrace clean energy in a big way.

When that happens, Singapore will be well-placed to tap on that growth, as the Economic Development Board (EDB) has mapped out a 'five-pronged strategy' to propel the Republic ahead in the clean energy stakes.

Clean energy is set to hit its next 'inflexion point' - where growth will explode - when grid parity is achieved, said the EDB's managing director, Mr Ko Kheng Hwa, in an interview with The Straits Times last Friday.

Grid parity is the point when it would be as cost-efficient to get electricity from the sun as it is from the conventional way of burning fossil fuels.

'With oil prices at a record high of almost US$100 a barrel, this looks like it'll be sooner rather than later,' said Mr Ko. 'When global markets reach this point, Singapore will be ready for it.'

EDB's strategy involves five specific areas: technology development; capability and manpower; growing a local eco-system of companies; encouraging local adoption of the technology; and branding and awareness.

Already last year, the industry had reached another milestone, said Mr Ko. 'It became profitable, at the same time, when environmental issues were taking centre stage in global debates. We spotted the trend and now we are moving in quickly.'

The global clean energy market has grown massively, with revenues in the industry climbing from US$40 billion in 2005 to US$55 billion (S$79.8 billion) last year, said leading US research firm Clean Edge.

Revenues are projected to hit US$226 billion by 2016.

Last week, Singapore trumped 200 other locations to emerge as the choice spot chosen by Norway's Renewable Energy Corp (REC) to build the world's largest solar plant at a cost of $6.3 billion.

'We have reached a turning point,' said Mr Ko. 'The REC project was the big boost. Suddenly, we're on the world map,' he said.

The win was the result of some 'nine months of intense courtship' of the REC.

'From this point, we will be accelerating efforts in our strategy. We believe this sector will attract interest from many Singaporeans, especially the younger generation, who are generally more environmentally aware,' he said.

Singapore's foray into clean energy, referring to energy obtained from renewable sources such as the sun and wind, began two years back when EDB was 'scanning the horizons' for areas of global growth.

So far, the Government has committed $350 million to transform Singapore into a 'global clean energy hub'.

Prime Minister Lee Hsien Loong has said that Singapore should focus on developing the clean energy sector which has great potential.

The overall target is for the industry to generate $1.7 billion and employ 7,000 people by 2015.

The rising star of the clean energy race, says Mr Ko, is the solar industry - as it is closest to 'commercial viability', where demand has reached a critical mass globally.

Why EDB is so 'gung ho' as he puts it, about solar, is because of Singapore's many advantages.

As the manufacturing process of solar products is similar to the semiconductor industry, the country has 'decades of manufacturing know-how' to offer.

Also, its location in the sun belt places it in a huge potential market; and it has a skilled workforce of engineers, architects and the like that the industry needs.

'Going into renewable energy also reinforces our clean and green image,' added Mr Ko. The top priority now is sourcing for more funding and training people for the required jobs.

Meanwhile, a Clean Energy Programme Office has been set up to accelerate the industry's development.

Besides solar, EDB has a portfolio of other 'clean-tech' areas of research, such as in wind, fuel cell, and tidal energy.

So is Singapore putting its bets on a sure-win area?

CIMB-GK economist Song Seng Wun said the industry 'will be likely to pay off in the long run, given current trends in environmental movement'.

Standard Chartered economist Alvin Liew agreed that it was a good move to further 'diversify' Singapore's economy.

'But how successful the industry will be in the future, really depends on what happens in the next few years,' he added.

Mr Ko remains convinced of the industry's bright future. 'We will see interest and momentum accelerating now. We are definitely for real.'