“The recovery from COVID-19 has increased demand for oil, such as for use by industries, commercial and transport, so the price of oil increased,” said Assoc Prof Chang.
“The Ukraine-Russia war affected production and supply of oil (so) it also increased oil prices … As long as the war continues, the price is expected to increase,” he added.
Dr David Broadstock, a senior research fellow and the head of the Energy Economics Division at the National University of Singapore’s (NUS) Energy Studies Institute, said the decision by Europe and other countries to stop purchasing natural gas from Russia has forced them to search for new gas suppliers.
“At the same time, there are limits to how much gas supply chains can scale up without major new infrastructure development, which would also take some years to provide.
“This is a perfect recipe for natural price increases for natural gas, as those countries which are willing and able to pay higher prices may choose to do so to ensure a secure energy supply,” said Dr Broadstock.
He also noted that China’s demand for natural gas has been consistently growing as it searches for a cleaner fuel option as compared to coal. This is especially so during the winter season, which has created long-term pressure on markets.
While all these have resulted in the rise of oil and energy prices, Dr Broadstock said that key energy commodity prices have, to some extent, stabilized.
He added that the Energy Market Authority (EMA) implemented mechanisms following local power market disruptions in 2021, to help Singapore reach stable prices faster.
This would take about a year, other experts including Assoc Prof Chang estimated.
On Apr 4, Second Minister for Trade and Industry Tan See Leng spoke in Parliament about these mechanisms, which include a standby liquefied natural gas facility and requirements imposed on power generation companies to “bolster existing stockpiles and provide additional layers of fuel security to cope with the short-term shocks to global gas supply”.
They were introduced after “upstream production issues in Indonesia’s West Natuna gas field and gas pressure issues from South Sumatra in the fourth quarter of 2021 caused disruptions to our piped natural gas supplies,” said Dr Tan, who is also Manpower Minister.
“As a result, some companies had to purchase more liquefied natural gas at elevated global gas prices to make up for the drop in piped natural gas supplies.”
EMA has also modified market rules, allowing the agency to direct power generation companies to use gas from its standby facility, allowing the authority to manage the cost impact on consumers.
“These measures have ensured that we have sufficient fuel and electricity supply and stabilized the uniform Singapore energy price,” said Dr Tan.
However, experts said that the prices and impact on supply reinforce the need for Singapore to diversify its energy sources and improve its local production — which currently makes up just 5 per cent of the country’s energy supply.
Dr Chua Yeow Hwee from the Nanyang Technological University’s (NTU) economics division said: “The increase in electricity costs during the past few months is a good opportunity for the Government to accelerate the adoption of green energy.”
Dr Broadstock added: “The more power that can be produced locally, the more secure and predictable energy costs will become.
“However, there are limits to just how much solar energy can be deployed in Singapore. While more investment into solar will be very welcome, Singapore will inevitably need to explore additional energy resources.”
Dr Broadstock referred to recommendations made by a committee commissioned by EMA on Mar 22, which include importing renewable energy from verified resources — such as wind, large-scale solar and hydropower — which are abundant in other countries.
VIABILITY OF SOLAR ENERGY FOR HOUSEHOLDS
Some households looking to cut their electricity bills without changing too much of their lifestyles can turn to generating their own electricity via solar power, which is the main renewable energy option here.
Professor Subodh Mhaisalkar, executive director of NTU’s Energy Research Institute, noted that solar panel technology has advanced over the years, reaching efficiencies of between 20 and 22 per cent. This efficiency refers to the amount of electricity generated from solar energy that falls on the panel.
“Efficiencies used to be around 15 per cent a decade ago, and we have seen a 30 per cent improvement … it definitely makes sense from both sustainability and cost perspectives,” said Prof Mhaisalkar.
He noted that a barrier to getting these panels installed is the upfront cost, but solar leasing and favorable financing options have made installation a compelling value proposition.
Under solar leasing, a company pays for and installs a solar system from which home owners can buy electricity from.
Solar panel installation companies told TODAY that they have seen increased interest in their services this year, with more homes looking to do their part for the environment while saving money.
Mr Satish Prasath, founder and director of PMCE (Global), said his company used to receive about one inquiry a day for its residential services when it first started in December 2017, but that has increased to three queries daily this year.
The company has since outfitted 300 residential homes with solar panels. On average, households spend between S$18,000 and S$22,000, and the average home installs 30 panels. This would equate to about S$300 to S$400 saved a month, Mr Prasath estimated.
“We’ve installed panels in about 50 homes (so far) this year … people are concerned about the impact of the Ukraine-Russia war so they are looking for long-term solutions,” he said. His company of him put up panels in about 95 homes for the whole of last year.
The panels have a warranty of 25 to 30 years, so home owners stand to profit from installing them, he added.
Mr Benedict Goh, chief investment officer of UTICA, said another draw of solar panels today is the increased efficiency and return on investment.
“When we started selling goods related to solar panels in 2004, costs were much higher and the return on investment was around 10 to 15 years… people purchased to show off new technology, or because they wanted to go green,” he said.
“But now, it’s more efficient and costs (for the solar panels) have dropped by half of what they were in early 2010.”
Mr Goh said his company has done “hundreds” of installations, and inquiries for landed properties have increased by 30 per cent in the past two to three years.