Medco Injects Solar Power Supply to Singapore
Despite being the 2nd greenest country in Asia, roughly 95% of Singapore’s electricity is generated from natural gas. Visioning forward, the country aims to further develop sustainable energy as part of its 2030 green plan. Concerning the said issue, Singapore’s government intends to import electricity generated from green energy in the form of low-carbon electricity up to 4 gigawatts (GW) or around 30% of its total supply by the year 2035. However, the transition to renewable energy doesn’t guarantee cheaper electricity - as the costs of transmission, backup, and grid enhancements might even increase Singapore’s spendings to power its country. As of now, Singapore is considering laws that would allow the Energy Market Authority (EMA), the country's energy regulator, to impose pollution restrictions on power producing businesses. Due to a tight requirement of importing low-carbon power, EMA will not accept proposals from coal-generated electricity. The first proposal will be established in November with a plan to import up to 1.2 GW of electricity starting in 2027. The second proposal is expected to be issued in the second quarter of 2022 and will encompass the remaining electricity imports by 2035. These imports will allow Singapore to develop regional power grids, support decarbonization, climate action, and diversify energy sources.
Prior to this import policy, the energy crisis was occurring in a number of countries, one of which was experienced by Singapore. The energy crisis that occurred in Singapore was not separated from its relationship with Indonesia. The factor that escalated this issue in Singapore is its dependence on Indonesia in natural gas supply. In July 2021, the West Natuna pipeline used to import natural gas from Indonesia was damaged. In contrast to the high demand for electricity, the low energy supply could potentially lead to spikes in electricity prices. Knowing, Singapore is a country that relies on gas for electricity generation. This country almost fulfills all of its energy needs with imports. On the other hand, there is an increase in Liquid Natural Gas (LNG) prices throughout the world, which further accelerates the crisis in Singapore. As an impact, Singapore’s power plant company had trouble switching the purchase to LNG to cover gas pipeline supply deficiency from Indonesia. The issue also affects the three electricity companies in Singapore: Best Electricity Supply, Ohm Energy, and iSwitch Energy - which have stopped their enterprise due to the surge of electricity cost. By shifting to renewable energy, Singapore hopes to create energy stability and minimize volatility in electricity prices.
Medco Power Indonesia (MPI), accompanied by the Pacific Light Power Pte Ltd. (PLP) and Gallant Venture Ltd., which is part of the Salim Group (Indonesia's biggest conglomerate), are adhered to develop a pilot project to import electricity using solar power plants from Indonesia after receiving permission from the EMA of Singapore. The initial project is designed with a capacity of 670 MWp, which will provide the equivalent of 100 MW of non-intermittent electricity to Singapore. Roberto Lorato, CEO of Medco Energi, according to Kontan, also added that this project is a part of their commitment towards climate change and plans to develop a renewable energy portfolio. One of the positive catalysts that drove Medco Energi Internasional Ltd. (MEDC) performance was the recovery in most commodity prices. Subsequently, MEDC recorded an improvement throughout the first half of the year 2021. Reflecting on the reports of the first semester of 2021, they recorded an EBITDA of US$318 million or an increase of 15% year-on-year (YoY). In terms of total revenue, Medco Energi reached US$636 million, an increase of 11.66% compared to the previous year of US$569.8 million. Meanwhile, the oil and gas operational of MEDC's performance were down 7% year-on-year (YoY). This was due to routine maintenance programs and unplanned facility shutdowns, with low domestic gas demand during the COVID-19 lockdown in the second quarter. Besides improving the company performance, this project is also a practical step to strengthen the export of supply and demand relations between the ASEAN region Indonesia and Singapore.
Sources:
Channel News Asia
Kontan
Reuters