At the heart of it all is the Singapore Wholesale Electricity Market (SWEM), operated by the Energy Market Company (EMC). “We are like a bridge between electricity producers and consumers”, Vincent Wise, an economist at EMC’s Market Administration department said.

To understand what goes on in the SWEM, think of it like a stock exchange. However, instead of stocks being traded, it is electricity, Vincent explained. “And the price of electricity is determined by demand and supply,” he added.

At the start of the trading chain are the power generation companies which generate electricity and sell it in the market at every 30 minutes. Here, EMC facilitates market clearing to determine the wholesale electricity price (“WEP”), decide which power generating assets are to run, and at what levels at different times. EMC also helps in settling all trades in the SWEM, making sure money is collected from the market’s net debtors to pay its net creditors.

“These functions run around the clock, so maintaining robust and reliable systems is crucial and a big part of what we manage,” he said.

Once the electricity is sold in the SWEM, electricity retailers will buy electricity in bulk and offer it to consumers through various electricity price plans that are usually short-term in nature (e.g. two to three years for example).

For consumers buying electricity through SP Group, this is done via vesting contracts that are longer-term in nature. This is how consumers buy electricity at the regulated tariff rate, set by SP Group and reviewed quarterly by the Energy Market Authority (EMA).

Since 2018, the electricity market has been fully liberalised, providing consumers with choices and flexibility in their electricity purchase options.

Watch the video to learn more about the electricity tariff and what it comprises.

With multiple players in the market, transparency and fair competition are essential. In this regard, EMC provides accurate real-time market information on its website while trading activities are governed by market rules which are regularly reviewed by the Rules Change Panel.

There are enforcement and dispute resolution processes, similar to Singapore's police force and the courts. EMC’s Market Assessment Unit assists various independent panels that monitor the efficiency and fairness of market operations, enforces the market rules and ensures that disputes are resolved fairly, efficiently and cost-effectively.

Reflecting on the ingredients for success in operating an efficient and competitive wholesale electricity market, Vincent said it all boils down to building solid partnerships with the industry and having clear communication channels for engagement and gathering of feedback.

This is why EMC regularly organises monthly industry forums and biannual Roundtables. “Such activities help to bring together the collective minds of different market players on best practices and recent market developments,” Vincent said.

Singapore's electricity market is a testament to the power of collaboration and innovation. With EMC at the centre, supported by a network of dedicated industry players and robust regulatory measures, the market continues to thrive, providing reliable and affordable electricity to consumers.

Separately, EMA is progressively introducing measures to strengthen the overall market structure and boost its resilience to price volatility. For instance, an entity will be established to centralise the procurement and supply of gas by aggregating gas demand from power generation companies. The Temporary Price Cap, which acts as a "circuit breaker" during periods of high and sustained volatility, was also introduced in 2023 to help mitigate extreme price volatility in the SWEM.

The commitment to transparency, competition, and continuous improvement ensures that the market not only meets current demands but is well-prepared for future challenges.

As Singapore moves forward, the combined efforts of all stakeholders will undoubtedly lead to a brighter and more sustainable energy future for everyone.