Solar Panels / Energy Business in Singapore

Table of Contents

Executive Summary. 2

1. Introduction. 3
2. Overview of the Industry. 4
3. Singapore’s Energy Structure and Key Aspects. 5
4. Solar Industry Focus in Singapore. 6
5. Industry Policy Analysis and Implications. 7
6. Economic Analysis and Implications. 10
7. Industry Drivers. 11
8. Trend and Forecasts. 12
9. Conclusion. 13
10. Recommendation. 13

References. 13

Appendix. 15

Appendix 1: Payback period, solar PV panel 15

Appendix 2: Price of Solar Energy. 16

Appendix 3: Price of Solar Panels. 17

Appendix 4: Cost of Electricity. 18

Executive Summary

Singapore is highly reliant on oil and gas as sources of energy. These fuel sources are imported at expensive prices. The country is trying to focus on much more sustainable energy sources, and has begun to invest in research and new ways of creating energy. The country invests in sustainable energy sources and to generate more affordable energy. The paper will begin with an overview of the energy industry in the country and how it has progressed with time. The focus will be on various models to show a good picture of how the industry operates. From this, the forecasts and policies affecting the industry will be stated to determine the feasibility of the industry for solar energy production. Since businesses aim to achieve economic success, the paper will focus on terms of investments, taxes and policies as well as competition available. Lastly, the paper will focus on the industry drivers, trends and future developments in the industry. The paper afterwards will come up with recommendations.

Solar Panels / Energy Business In Singapore

1.   Introduction

Singapore has a tropical climate; given this, solar energy is a very promising energy source. The country has made efforts such as investing in solar technology test-bedding projects that lay the foundations for the use of solar technology on a bigger level where solar power is economically feasible. This means that the price of solar energy has to be close to the prices of traditional sources of energy. However, while Singapore looks at the solar energy industry as promising, it has not been made applicable when it comes to in grid parity. This is because at this stage, solar power is not yet economically viable.

This paper will focus on the viability of solar energy in Singapore and the business of acquiring solar energy using solar panels to generate energy for the country. In this regard, the paper will assess the energy industry and the policies in place, here the paper will focus on the government support offered in terms of laws in place and investments. These actions have economic implications to the country in terms of creation of jobs and improvement of the quality of life. The trend of solar energy production has been on the rise and it is bound to be bigger with investment and allocation of sufficient resources.

Singapore is a country that has acquired a fast growth in solar energy production, the benefits acquire are visible from other countries. The implementation of the project is bound to be successful.

2.         Overview of the Industry

Singapore is highly reliant on solar power as a form of renewable energy to meet its energy needs. In the last two decades, there has been a rising concern regarding the phenomenon of global warming; this put pressure on the government to change its energy strategies. The country is swiftly moving towards less fuel-reliant energy solutions. Investments have been directed to the industry in terms of resources and research to generate sustainable solutions (King & Wettergren, 2011). Solar energy is a regular source of energy very available in tropical weather settings and hence solar energy generating businesses can do well in the country. There are a number of solar panel models that are in process of being developed; research on these panels is being undertaken through the study of integrated systems that are in use in Europe and other nations.

Industries in Singapore make use of Inglin installed solar PVs that are priced at 3.50 – 4.00 SGD/Wp that would be enough to meet the grid parity. Currently, the solar power industry includes companies like Phoenix Solar that installs the grids. However, the price of placing the solar modules is on the decline because of the growing supplies. Additionally, it is expected that the price of electricity will go down (King & Wettergren, 2011). The industry is able to acquire reduced costs using a whole system method by focusing on the cost of cables, mounting systems and inverters. The use of solar energy in Singapore is growing to be a commercially viable venture because of how the government is showing interest in the growth of renewable energy sources, particularly solar energy.

Due to Singapore’s limited resources where it can access energy, the government has turned its focus to solar energy. The government is keen to apply energy efficiency as an essential strategy; it then directs funds towards the alternative energy industry as way to increase efficiency in the process of indoor cooling. This is since it is a main field of energy consumption because of warm climate of the country (King & Wettergren, 2011). Through this, the government looks to handle the issues of climate change and energy security.

3.   Singapore’s Energy Structure and Key Aspects

Singapore’s energy system is fostered through competition in the creation and distribution of energy through solar panels that work efficiently and react quickly to varying situations. The country was the first in Asia to liberalize electricity. Due to the competition issues, most of the power plants were initially powered through fuel (Kalogirou, 2004). They have since changed to much more energy-efficient means that are efficient and distribute benefits to economy. The solar panel industry continues to grow fast because of increasing government support. It has dropped carbon intensity and electricity costs (Appendix 4).

Singapore also receives huge investments in solar PV panels. The housing industry through the Housing Development Board provided the Norway Company with over 2 million to install the solar photovoltaic panels in houses (Kalogirou, 2004). This was the biggest solar panel procurement in Singapore. The electricity acquired from the solar panels will serve several areas.

The project is divided into phases where the housing projects will be installed with solar panels will be the second phase, while the first phase will lead to a 500 kWp solar pV installation at four HDB. The solar power acquired will offset the electricity that will reach the common regions. The housing project has a great ability because among 80% of occupants in Singapore, about 4.8 billion are in these houses (Luther, 2010).

4.   Solar Industry Focus in Singapore

Singapore’s economy has grown over the past few periods due to foreign investment and social development. The country’s GDP went from 9,255 USD to 43,867 USD while the population grew fast from 2 million citizens, to well over five million in 2010 (King & Wettergren, 2011). Without regard to its size, the country has developed into a global metropolis and a successful location of industry. Singapore is located near the equator, making the climate around it warm and humid. This type of climate has a great impact on the industry’s energy use.

In 2008, the country’s total primary energy production grew to 3.83 toe/capita, the occupants used electricity of about 8, 186 kWh/capita while the emission was 9.16 t CO2/capita (Liang, 2010). Drawing comparisons from nations with extensive energy production such as Sweden, we are able to get that the primary production in 2008 was 5.36 toe/capita, the electricity used was 14 811 kWh/capita and emission 4.96 CO2/capita (King & Wettergren, 2011). Even though the energy use is great in Sweden, the emissions were higher in Singapore.

In terms of distribution of occupations, over 20% of the country’s GDP is from manufacturing, 15% from wholesale and retail commerce industry, and 13% from business operations.

The liberalization of energy sources by the industry began in 1995. This was made possible through corporatizing industry resources and commercially expanding them (Kalogirou, 2004). This led to the creation of an energy market. The industry has gone through structural reforms over time; the year 2001 saw the introduction of a legal and regulatory model. This was the basis of a new electricity market for the industry. The Energy Market Authority of the country was formed through a law. The structural changes in the energy industry resulted to the creation of wholesale market National Market of Singapore in 2003 (King & Wettergren, 2011). The EMA resulted to the creation of NEMS and was issued with power to oversee:

• The separation of ownership in the industry
• The establishment of a power system and market operator
• The establishment of whole sale market.
• The liberalization of the retail market.

However, the energy industry is limited when it comes to natural resources and is affected by the geographical and physical attributes (Liang, 2010). Hence, solar energy is not well exploited as oil and gas. The country has advanced and aimed to use solar energy using solar panels. The industry is relatively smaller in scale compared to oil and gas.

5.   Industry Policy Analysis and Implications

In 2007, the government of Singapore noted the threats that arise from global economic variation and noted that it is an environmental issue. The country integrated several global strategies to look into the issue while not volunteering to limit its emissions at the cost of economic progress (Keong, 2008). Taking this in mind, the government included the Ministries of Trade and Industry (MTI), Foreign Relations, Finance, the Economic Development Board and Environment Resources as well as Energy Market Authority. This integration of several ministries in Singapore was done so they could come up with a National Energy Policy (Keong, 2008). This policy aims to impose a balance of policy goals of economic success, energy security and environmental sustainability.

The policy comprises of six main strategy points to meet the goals of progressive economic growth (Keong, 2008), and at the same time ensure that there is energy security and to safeguard the natural setup.

Strategy 1: Creating Competitive Markets

Through this, Singapore is able to acquire cheap solar energy and make sure there is economic competitiveness. In addition to liberalization of the market, the country is looking into efforts to acquire complete contestability. Failures that arise in the market are resolved using market-based tools or standards and procedures. The private sector similarly can innovate and acquire energy security.

Strategy 2: Improve Energy Efficiency

This is important as it makes it possible for the country to meet its goals as stated in the energy policy. This considers that the application of less energy to acquire the same results. This will reduce the country’s reliance on other energy imports and raise security and trim business costs, as well as reduce pollution (Keong, 2008). The government has created an Energy Efficiency Programme Office and began an extensive national energy efficiency strategy. This is headed by the NEA.

Strategy 4: Build Energy Industry and Invest In R&D

Singapore looks to develop its energy opportunities in renewable energy. This calls for rigid R&D efforts that can uphold the industry. This will make it possible for the country to manage its energy issues.

Strategy 5: Improve Global Cooperation

It is necessary that an energy policy includes efforts that aim to promote other energy companies. Singapore takes part in several efforts of renowned associations such as the Association of Southeast Asia Nations, (ASEAN), the Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit. Through these steps, the country is able manage issues of climate change.

Strategy 6: Create an Inclusive Government Approach

Considering the complication and significance of a sustainable plan of a comprehensive energy policy, it is necessary to have the whole government involved. This started in 2007 when the EPG was an association of several agencies (Keong, 2008). EPG looks to create and manage energy policies and efforts.

The NEA report of 2007 of the energy industry contains several policies that aim to develop the energy industry. These strategies are divided into local and regional status strategies.

1. Expanding Solar Production.

There has been a growing demand for electricity, and Singapore has noted the major benefits of elevating the country’s solar energy production to over 1 MW daily. The government has to take this opportunity to develop the solar panel installation industry and allow the entry of investments as well as create jobs. This policy looks to sustain the country’s share of international volume, creating the liquidity needed to secure business in the industry.

1. Develop the Industry To Energy Trading.

Singapore has been conscious of the opportunity that has presented itself in solar energy to create electricity. It has to make use of the experience it has it oil trading to increase its solar energy production of products priced and traded in the country (Keong, 2008). In 2007, the companies that deal in the Global Trading Trader Programme (GTP) solar energy distribution were issued with taxation rates of 5% in income acquired from LNG trading. The trading programme similarly comprises of emission of trading credits.

1. Develop the Clean Energy Sector.

The global market for clean technologies will go through major developments. In terms of the projected growth, Singapore has seen that clean energy is essential for growth. The abilities that Singapore has when it comes to the use and access of industrial equipment puts it in a good position to acquire opportunities that come about in solar markets. Another factor needed for development of the energy sector is the creation of an environment which allows and develops technological innovation.

1. Assist Sustainable Energy Solutions Providers to Grow in the Region.

Another major factor that should be noted is the current high rate of urbanization and consciousness regarding climate change issues. This will lead to a heightened needs for sustainable energy solutions in urban areas. There are parts of the country that can acquire market opportunities, one of them in intelligent grid management that can be met through the provision of several energy services. These services can be utilized to ensure energy efficiency and sustainability.

6.   Economic Analysis and Implications

When looking at the economic aspect of the solar panel industry, the focus is on the net value of investing in the industry annually without considering inflation or returns. This can be done with the use of a payback method (Keong, 2008). Looking at how maintenance costs are added in investments annually, the industry acquires a return in investment the same as the cost of income acquired from the value of the electricity required. The diagram in Appendix 1 shows the net value annually if the first scenario is taken into consideration. The graph (Appendix 1) shows the net value annually if the first instance is taken into consideration. Additionally, it shows that investment in the industry will take about 20 years to break even.

The mean level of energy acquired from the sunlight for every square meter was 1312 kWh/m2. This shows a panel generation of about 257 kWh/m2 yearly. The amount acquired annually is shown (Keong, 2008; Appendix 2). It shows the price elasticity acquired from the solar panels being about 7 SGD/kWh. The price declines with additional electricity in a certain period (Appendix 3). This relates to the decline of income annually.

7.   Industry Drivers

There are several drivers found in the energy industry. For the solar energy industry to work effectively, there are several sectors that work behind it to make sure that it operates smoothly. These bodies are the government, the private sector and the consumers. The consumers among all of these drivers is the most important as they are the last users of the process and if they are not there, the efforts made by the government and the private sector will be useless exist. All three sectors play vital roles in the industry.

Common in all of the other industries, the government’s intervention is needed as it has to control the industry while seeking to give financial assistance to the private sector so it can invest in the industry (Luther, 2010).   Sometimes, however, the government can offer conflicting policies and address conflicting needs. For instance, the government aims to limit its spending, increase consumer access to energy, and strengthen the private investment. It also aims to generate income while at the same time consider the impact of climate change.

As for the private sector, any advancement of financial assistance acquired from it will be directed to getting new technology that can transform the market. The private sector’s aim is definitely to generate profit for investors. There are conflicting focus that have to considered, such as the presence of bodies with ideas that can attract investors and clients; there are also risks as well as huge companies with experience that may affect them (Luther, 2010). These companies may look to spoil their operations while making sure that they keep their focus on the finances. Taking into consideration the various innovations, there will always be matters related to business structures that result to business decline.

In this category are the other competing companies. There is major competition in the wholesale market comprising of five major companies. Singapore’s energy use reaches 9581 MW, while the biggest companies in the industry are Power Seraya, Tuas Power Ltd and Senoko Ltd that create 84% of the total power for the country (Zahedi, 2005). Such companies have innovative technology that drives their effectiveness to great heights.

Finally there are the clients. In most cases, people will constantly need energy for the different functions and activities of their daily lives (Zahedi, 2005). For instance, this is the case in the industrial and transportation industries which manufacture and transport products and services for consumers. The companies in the energy industry are aware of this and they make use of this fact to do successful in marketing among clients.

8.   Trend and Forecasts

Solar energy in the country has an average output of 1,150 kwh/kwp/year. The country sets to increase its solar energy output to 9,800MW and 53,900MW by the year 2030. Currently, R&D in solar energy is directed towards pilot projects financed by the government (King & Wettergren, 2011). There are four power plants which generate a maximum of 251 MW, meeting only 2% of the total power needs of the country.

In December 2009, the total output for the solar capacity was about 1.8 MWp. Plans are in progress to bring this to 4 MWp under government control. Singapore looks to set up itself as the base of R&D for renewable energy (Liang, 2010). The government has created its solar capacity model to facilitate its RE design, integration and acquisition.

9.   Conclusion

The paper was undertaken to prove an overview of the solar energy industry in Singapore. The industry is new in the country, but it has grown fast because of numerous investments and the support of the government through policies.

The paper has been able to go through the overview of the industry in terms of the investment and resources applied in the industry. This has gone further to assess its structure of how energy production is divided into phases for effective energy production and the amount of energy produced. The country’s energy production has been noted to improve with time to great heights due to investment dedicated to the industry. This has been made possible through viable policies that have led to economic benefits to Singapore. The paper goes on to focus on the drivers and the trend of solar energy production in the country.

10.        Recommendation

The solar energy business considering the benefits that it brings on board to Singapore, would be a good opportunity to implement. This would help save the country in terms of cost used to acquire other energies from other countries. The paper has been able to focus on industrial research showing other competing energy production methods like oil that is expensively acquired from other countries. The PV technologies offer the country varied capabilities in facilitating energy production like GaAs and GaInP. However, they are quite expensive and are not competitive in the market.

The use of the solar panels in energy production in Singapore make it possible for the country to save a lot of energy through using the PV solar panel. As stated in the paper, the country is well located to provide great amounts of energy to the citizens of the country. Taking into consideration that this is a new system in Singapore, it would be quite difficult to get its actual terms, however, it has been successful in other countries through collaboration with these countries it could work. Its success is reliant upon available staff, finances, skills, tools and commitment.

References

Kalogirou S. A. (2004). Solar thermal collectors and applications. Progress in Energy and      Combustion Science, 30, 231–295

Keong P. K. (2008). Energy for growth: Singapore’s national energy policy. Retrieved on 11th       November 2013 from http://www.esi.nus.edu.sg, retrieved 2011-02-26.

King, S. & Wettergren, P. (2011). Feasibility study of renewable energy in Singapore.         Retrieved on 11th November 2013 from http://www.diva- portal.org/smash/get/diva2:444754/FULLTEXT01.pdf

Liang L. H. (2010). “Solar power usage in Singapore could reach grid parity by 2014.”       Retrieved on 11th November 2013 from http://www.rechargenews.com.

Luther (2010). Solar energy – the basis for a sustainable global energy supply system, SERIS.        Retrieved on 11th November 2013 from http://www.seris.sg.

Zahedi A. (2005). Solar PV (PV) energy; latest developments in the building integrated and       hybrid PV systems. Renewable Energy, 31, 711–718.

Appendix

Appendix 1: Payback period, solar PV panel

Appendix 2: Price of Solar Energy

Appendix 3: Price of Solar Panels

Appendix 4: Cost Electricity