Singapore gives solar energy sector a $20m boost

Incentive scheme to spur innovative approaches and capability
Lynette Khoo, Business Times 4 Mar 08;

(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.

Why no subsidies for solar power
Zakir Hussain, Straits Times 4 Mar 08;

THE Government will not subsidise solar power, Minister of State (Trade and Industry) S.Iswaran said yesterday. This is in line with its policy of not helping end-users pay for energy.

However, it is setting aside $20 million for a Solar Capability Scheme.

The fund will offset part of the cost of installing solar panels in new, green buildings. The Economic Development Board will release more details soon.

Mr Iswaran was responding to Nominated MPs Edwin Khew and Eunice Olsen, who suggested subsidising solar power, which is costlier than energy from more pollutive sources such as fossil fuels.

'Our basic policy tenet,' MrIswaran said, 'is that energy costs should be borne in full by end-users. We do not subsidise the cost of energy because it will dampen price signals and create the incentive to over-consume.'

He added that the Government should be consistent and not subsidise a specific type of renewable energy.

Otherwise, questions would be raised about why it subsidised solar power but not bioenergy, or why it provided subsidies for energy but not other goods.

It is thus better for the Government to invest in research and development to develop technologies that will lower the cost of generating alternative energy, MrIswaran said.

There would then be no need to talk about subsidies.

Subsidies are also not sustainable in the long run, he said, noting that the Government has instead encouraged competition to put downward pressure on prices.

And consumers have benefited, he said.

To back his point, he observed that the price of fuel oil has doubled since 2001, but the electricity tariff for households has gone up by only 14 per cent, even though fuel makes up 55 per cent of the cost of electricity generation.

Households will also gain when the gas market is further liberalised.

Mr Iswaran noted the tensions and trade-offs between energy security, economic competitiveness and environmental sustainability, but stressed that economic growth is the best response to the current uncertain global energy outlook.

With growth, Singapore will have the resources to secure its energy supply, keep the environment clean and find new solutions.

The Government is also diversifying its sources of energy, such as by importing liquefied natural gas.

It has set up an International Advisory Panel on Energy comprising thought leaders, eminent individuals and energy experts from around the world.

To be chaired by Mr Iswaran, the panel will meet for the first time in November as part of the first International Energy Week here.

Green developers get $20m fund
Fund will cushion cost of integrating solar panels into new Green Mark buildings
Cheow Xin Yi, Today Online 4 Mar 08;

DEVELOPERS of new and green buildings can now tap into a $20 million fund set up by the Government — a decision that is certain to sit well all-round as oil prices continue to surge.

The fund will partly offset the cost of integrating solar panels into new buildings "which attain a certain level of Green Mark standard", Mr S Iswaran (picture), the Minister of State for Trade and Industry (MTI) told Parliament yesterday.

Under a 2005 scheme, buildings that meet environment sustainability standards will be Green-Mark-certified by the Building and Construction Authority of Singapore.

"This (Solar Capability Scheme) is a grant-based incentive, to spur more innovative approaches and capability development, in the architecture, design and system integration of solar panels as part of green buildings," he said, adding that more details would be released soon by the Economic Development Board.

It is part of the Republic's drive to encourage the adoption of renewable energy amidst concerns of high-energy costs fuelled by spiralling oil prices.

While the Government will encourage the use of solar energy through incentives and lowering grid connection fees, Mr Iswaran stressed that it will, however, stop at subsidising the cost of renewable energy through feed-in tariffs (Fit).

Fit is a form of energy subsidy where renewable energy companies are guaranteed contracts for energy produced at higher prices as compared to those from traditional sources.

The issue cropped up recently when Today ran a story on how the business community had urged MTI to consider Fit to promote the energy sector. MTI had argued against it, citing distortion to market and a possible increase in electricity prices.

Responding to a query from Nominated Member of Parliament Eunice Olsen as to how much more it would cost consumers with the adoption of Fit, Mr Iswaran said compared to a pool price of 22 cents per kilowatt, solar energy produced under Fit would be as high as "two to three times the cost, perhaps a little lower because oil prices have gone up now".

He added that it was not an "optimal strategy because what we are effectively doing is encouraging solar".

"The question is why solar when it can be bio-energy, bio-diesel and so on ... why not subsidise others as well?" he asked.

Asked by Ms Olsen if MTI's insistence against Fit for renewable energy is a reflection of its low priority for developing the industry, especially when tax credits are granted for expensive commodities like green cars, Mr Iswaran explained that the promotion of solar energy, or any other industry, can be done through other means.

Citing research and test-bedding initiatives such as the recently launched Solar Energy Research Institute of Singapore and the $170 million allocated to the Research, Innovation and Enterprise Council for Solar Research and Development that aim to develop alternative energy technologies, Mr Iswaran said such approaches "give better returns in the long run".

"The right strategy is to help the industry get into a position of competitiveness vis-à-vis existing supplies of energy, but to subsidise it is to distort the market in terms of production and consumption decisions and we don't think that's the right thing to do," he said.

Amid the ongoing debate, Singaporeans were hit again by the impact of higher oil prices — which hovered around US$102 per barrel yesterday — as Caltex raised its price for petrol and diesel by 4 cents a litre.

S$20m Solar Capability Scheme to help new buildings tap solar energy
Channel NewsAsia 4 Mar 08;

SINGAPORE: The government has announced more initiatives to fuel growth in the energy sector in Singapore.

They include a S$20 million Solar Capability Scheme to encourage businesses to diversify their energy sources.

Singapore can now do more to grow the clean energy sector which will help to mitigate the risks of high oil prices and to ensure energy security.

The new Solar Capability Scheme will help to spur innovative use and integration of solar panels for new buildings.

Minister of State for Trade and Industry, S Iswaran, said: “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. EDB will be releasing more details of this scheme soon."

Mr Iswaran will also chair a new international advisory panel on energy.

The panel, comprising experts on the topic, will meet in November, as part of Singapore's first International Energy Week.

The event will also feature a Singapore Energy Conference where policymakers, academics and industry players can share ideas and spearhead new initiatives.

Apart from energy concerns, MPs continued to call for more measures to give businesses a leg up, in view of rising costs.

MP for East Coast GRC, Jessica Tan said: “Just a week ago, one of the industrial park manufacturers shared with me that he had a customer cancel an order with his company - the reason given was that Singapore products were getting too expensive due to our high costs, and the weakening US dollar."

Another questioned the role of JTC - a government agency tasked to supply industrial land at competitive rates.

MP for Ang Mo Kio GRC, Inderjit Singh, said: "First Ascendas was formed and now the perception is that JTC is ploughing its industrial space into Mapletree. REITS will require market driven prices.

“So the question is, has the government shifted from the policy of providing affordable industry and commercial space?"

Trade and Industry Minister Lim Hng Kiang, replied: "For the flatted factory space, JTC's market share is around 20 per cent, so we take our cue from the market. And it is this sector that we are divesting, because we believe that industrial space in Singapore is fairly competitive market.

“So JTC need not stay in this field, JTC will concentrate on land. For the pricing of JTC's industrial space, factory space, this is set by the market. But for the pricing of land, we benchmarked ourselves against our competitive location and we are careful not to price ourselves out of the market.”

Mr Lim added that R&D and innovation will take Singapore further up the value chain.

And despite the tough global conditions, the outlook this year is for a slower but still healthy growth at between four and six per cent. -CNA/vm