Subsidies not prudent for renewable energy in Singapore

Reply from MTI, Straits TImes Forum 13 Mar 08;

IN HIS letter, 'Vital to pursue renewable energy policy' last Friday, Mr Tan Tze Kiang says the Government should subsidise alternative energy, in particular solar power.

Mr Tan claims solar power is 'almost free', and yet he also says there are 'relatively heavy start-up costs' which should be subsidised. The fact is that solar power costs two to three times as much as electricity generated through conventional means.

This is precisely due to the high upfront cost of installing solar panels, which has to be included in the cost of solar power generated over the useful life of these panels. A subsidy will distort the energy market by artificially lowering the cost of solar energy and encouraging its consumption relative to other forms of unsubsidised energy.

Further, if the Government were to adopt Mr Tan's suggestion, heavy subsidies will be required to encourage the wider adoption of solar power. It is neither a prudent use of public funds nor is it sustainable in the long run.

We agree it is important to develop renewable energy as part of our overall national energy policy. Our main thrust is to invest in research and development (R&D) as new technologies can help lower the cost of alternative energy sources and accelerate their adoption. For example, the National Research Foundation has committed $170 million to R&D in solar technologies.

The newly announced $20 million Solar Capability Scheme will build capabilities in the design and system integration of solar panels for new buildings which attain a certain level of Green Mark standard. This and other schemes aim to grow the alternative-energy industry into an important part of our economy.

Mr Tan asks why we emphasise economic growth as a response to the uncertain global energy outlook. It is because economic growth underpins our energy security by ensuring that Singapore continues to have the resources to procure energy - conventional or renewable - for our needs from global markets.

Lim Bee Khim (Ms)
Director, Corporate Communications
Ministry of Trade and Industry