SINGAPORE - Energy-intensive commercial and industrial firms here have been invited to join a new initiative that rewards companies for reducing their electricity demand on the national power grid.

When demand is managed well, it will have a knock-on effect on businesses and households, which may see their electricity bills lowered in the long run, said the Energy Market Authority (EMA), which runs the new Demand Side Management Sandbox initiative, on Wednesday.

Companies that consume at least 100 kilowatts of electricity an hour are eligible for this initiative. In comparison, the monthly energy consumption for a typical four-room Housing Board flat is about 360 kilowatt hours.

The two-year initiative comprises two programmes that firms can choose from. The first one – the Demand Response Programme – lets companies reduce their electricity demand voluntarily when wholesale electricity prices are high.

Firms will be given an incentive payment for saving electricity.

To reduce demand, companies could shift their energy-intensive processes to non-peak hours in the early evening, for example.

Under the second programme – called Interruptible Load – companies have to be on standby to reduce some electrical load during periods of tight power generation supply. Reducing their load will help to raise the reliability and stability of the grid.

The initiative was announced by Manpower Minister and Second Minister for Trade and Industry Tan See Leng on Wednesday at a forum between Singapore and the International Renewable Energy Agency (Irena).

Dr Tan said: “While we seek to produce more renewable energy to meet demand, it is ultimately important for us to conserve energy to reduce overall energy demand and emissions, while contributing to energy stability.

“Rising energy prices due to increasing demand and tight supply have put governments and industries in a delicate position of balancing energy security, resiliency and affordability.”

Companies interested in participating in the sandbox initiative can register at https://go.gov.sg/demand-response-programme

Singapore District Cooling – which built the world’s largest underground district cooling system in Marina Bay – will participate in the sandbox.

The initiative will run from January 2023 to 2025. Participating companies will have to pay penalties if they under-deliver on their electrical load they promised to reduce.

Typically, a company will try to reduce at least 10 per cent of its energy consumption when activated to reduce demand, noted Mr Jeffrey Ng, managing director of electricity retailer Just Electric.

But reducing demand by postponing processes or switching sources may not be as straightforward as it sounds.

This could be a challenge for many companies because they use highly valued machinery, and frequently turning them off and on may affect the reliability and performance of these machines, said Mr Ng.

In the sandbox initiative, Just Electric acts as a facilitator and solutions provider for participating companies.

The Singapore-Irena High-Level Forum was held on day two of the Singapore International Energy Week at the Sands Expo and Convention Centre. At the conference on Tuesday, it was announced that the EMA will introduce stricter requirements for electricity retailers and consumers to cope with volatility in the energy market.

Among the changes, only electricity retailers with sufficient financial strength and sustainable business propositions will be allowed to participate in the market.

If the two-year sandbox initiative proves successful, it could be made permanent in the near future, said an EMA spokesman.