SINGAPORE - Electricity retailers here are seeing increased interest from businesses for longer-term electricity contracts since global gas prices began showing signs of stabilisation in March.

This also comes ahead of the discontinuation of the Temporary Electricity Contracting Support Scheme (Trecs) from May 1.

Initiated by the Energy Market Authority in December 2021 as global gas prices rocketed, the scheme provides large consumers with some respite from spiralling energy costs through monthly fixed price plans or plans with a significant fixed price component from power generation companies (gencos) and electricity retailers.

The agency is now encouraging consumers who are on Trecs or buying from the wholesale electricity market to consider retail contracts for greater price certainty.

Prices on the wholesale market change every half hour, and can go from 20 cents per kilowatt-hour (kWh) to as high as $4.50 per kWh.

Mr James Chong, head of the commercial division at genco and electricity retailer Senoko Energy, told The Straits Times that at the peak in 2021, it had about 150 customers on Trecs.

However, this has dropped by more than 90 per cent as longer-term retail contracts are now readily available at more competitive prices, he said.

Dr David Broadstock, a senior research fellow at the National University of Singapore’s Energy Studies Institute, said the wholesale market is quite frequently showing prices that are well below what Trecs would likely offer – an optimistic sign that prices have stabilised, and may even have room to fall in the coming quarters. 

Mr Chong said Senoko currently offers electricity contracts that range between 12 and 36 months, and contracts that last between one and two years are the most popular among consumers.  

“We are also expecting demand for retail contracts to increase, especially as customers that are currently on wholesale pool prices begin to shift away from these for more price certainty,” he added.

Mr Michael Wong, chief operating officer of Tuas Power, said the company had around 700 customers under Trecs in the first half of 2022, but almost all have since opted for one- to two-year contracts.

In total, Tuas Power serves close to 17,000 commercial and industrial consumers.

Geneco said it has had more than 600 Trecs contracts in total, with over 140 contracts in March 2021. This had dropped to fewer than 10 contracts by February 2023.

Currently, its 12-month contracts are the most popular, with the retailer providing contracts lasting up to 36 months, a spokesman for the company said.

However, Ms Geraldine Tan, the general manager of PacificLight Energy, said the company has seen increased demand from customers looking at longer-term contracts of three to five years and beyond.

“These customers come from varying sectors, including SMEs (small and medium-sized enterprises), MNCs (multinational corporations) and other organisations looking for a stable and reliable energy supply that allows them to manage their energy costs,” she added.

Union Power, Sembcorp and Keppel declined to respond to queries from ST.

About 95 per cent of Singapore’s energy is generated from natural gas, which is imported via pipes from its neighbours or in liquefied form from all over the world, with the top three sources in recent years being Australia, Qatar and the United States. 

The global gas crunch saw the price of spot liquefied natural gas (LNG) rising significantly, remaining elevated at more than three times the level at the start of 2021.  

This, combined with Singapore’s piped natural gas supply depleting since the second half of 2021, has led to increased volatility in wholesale electricity prices. 

Mr Johan Utama, a principal analyst of gas, power and climate solutions at S&P Global Commodity Insights, said Europe’s gas storage levels are currently high and its gas demand is lower, thus easing pressure on the global LNG market.

“Gas and LNG prices in South-east Asia are also linked to oil prices, which are now at a lower level compared with 2022,” he added.

Dr Victor Nian, the co-founder and chief executive of independent think-tank Centre for Strategic Energy and Resources, said the lower gas demand can be attributed to a warming winter, coupled with other factors such as reduced industrial activities and efficiency gains due to higher gas prices.

Mr Utama cautioned, however, that falling prices do not mean that the price risk is gone, as there could be little new LNG supply available in the next couple of years. 

This means there would be price volatility during periods of high global demand, or if there are supply disruptions.

Increased demand for solar power contracts

Some companies supplying solar power contracts have seen more consumers swop to a renewable energy option, a trend they expect will continue even with stabilised gas prices.

Union Power, which expanded into solar energy in 2021 amid the global gas crisis, said it is seeing “strong growing interest” for the adoption of solar photovoltaics in both commercial and residential sectors.

Likewise, renewable energy company Flo Energy told ST it has been seeing an increase in inquiries for solar power contracts since the gas crisis.