Singapore announces changes to gas procurement framework for power sector, and launches next stage of selection of a low- or zero-carbon ammonia solution for power generation and bunkering

29 November 2023

On 23 October 2023, the Energy Market Authority (“EMA”) announced changes to the gas procurement framework for Singapore’s power sector, and launched the next stage of the selection of a low- or zero-carbon ammonia solution for power generation and bunkering on Jurong Island. 

Changes to gas procurement framework

The Ministry of Trade and Industry (“MTI”) and EMA will be introducing changes to the gas procurement framework for Singapore’s power sector, primarily through the establishment of an entity (“Gasco”) that will centralise the procurement and supply of gas for the power sector by aggregating gas demand from power generation companies (“gencos”). Should the overall electricity demand exceed that indicated by the gencos, the Gasco will procure the additional gas volumes that are needed.

When implemented, this centralised procurement approach will apply to all future gas demand from the power sector, including gas contract renewals. Gencos will be allowed to continue with the existing gas supply contracts they have with their respective gas suppliers. Other industrial gas customers can continue to procure gas through licensed gas importers and will not be subject to this central procurement framework.

The new gas procurement framework will have a number of benefits:

  • First, as the sole procurer of upstream gas for the power sector, the Gasco will have stronger negotiating lever, and be in a better position to negotiate for more favourable contracting terms and optimise system needs;
  • Second, with greater economies of scale, Gasco can procure gas from diversified source countries to reduce concentration risk; and
  • Third, Gasco can also enter into longer term gas contracts which can help to provide more stable prices and supply.

The centralised gas procurement framework will complement the other security factors previously introduced as well as improve the security and resilience of the power sector’s natural gas supplies. EMA intends to set up Gasco in 2024 and will consult the industry on the details of the centralised gas procurement framework in the coming months.

Next stage of selection of low- or zero-carbon ammonia power generation and bunkering project developer

Together with Maritime and Port Authority of Singapore (“MPA”), EMA has shortlisted six consortiums whose proposals will be further developed in a closed Request for Proposal (“RFP”) to provide a low- or zero-carbon ammonia solution for power generation and bunkering on Jurong Island (“Project”). The RFP is the next stage in the selection of a developer for the Project, following the Expression of Interest (“EOI”) that was launched in December 2022 and closed end-April 2023.

A key thrust of Singapore’s National Hydrogen Strategy is to experiment with the use of advanced hydrogen technologies that are on the cusp of commercial readiness. Ammonia is currently one of the most technologically ready hydrogen carriers with an established international supply chain for industrial use. Low- or zero-carbon fuels such as hydrogen and ammonia may also have multiple end-use pathways for power generation and bunkering.

The closed RFP seeks to select a lead developer that the Government will work with to jointly develop the proposed end-to-end ammonia solution. Given the nascency of the technology and global supply chains, the Government will work closely with the selected developer to implement the Project. The Project positions Singapore as one of the first countries in the world to test and deploy a direct ammonia combustion power plant and support the holistic assessment of ammonia bunkering for both international shipping and domestic harbour craft. If proven viable, the Project will contribute significantly to unlocking the potential of low-carbon ammonia as a low-carbon fuel.

Reference materials

The following reference materials are available on the EMA website www.ema.gov.sg and the MTI website www.mti.gov.sg: