SINGAPORE Trends and Developments Contributed by: Adam Moncrieff, Karthik Kumar, Lynette Lim and Kelly Choo, Orrick, Herrington & Sutcliffe LLP
keeping Singapore’s grid reliable as its generation mix becomes more complex and decentralised. A VPP is essentially a digital platform that coordinates small-scale distributed energy resources (DERs), such as rooftop solar panels, battery storage systems and electric vehicle chargers, so that they behave collec- tively like a single large power station. As renewables grow and more DERs come online, individual assets are often too small to participate economically in grid services on their own. VPPs solve this by pooling their capacity and dispatching it in response to market sig- nals. A VPP registers as a single power generator in the Sin- gapore wholesale electricity market and can perform the following functions: • supply electricity to meet demand on the grid; • provide regulation services by adjusting electricity use in real-time to balance the grid; and • provide contingency services by injecting electricity into the grid during sudden supply losses. VPPs have the potential to respond to grid signals and optimise utilisation of existing DERs by enabling these assets to generate revenue streams beyond their pri- mary functions. This regulatory sandbox signals the EMA’s forward-looking approach to integrating new energy technologies into Singapore’s power system. Carbon Credits and Carbon Tax Singapore introduced Southeast Asia’s first carbon pricing scheme in 2019, covering approximately 70% of national greenhouse gas emissions across roughly 50 facilities in the manufacturing, power, waste and water sectors. The tax rate has followed an escalation path designed to give industry time to adjust. • SGD5 per tonne of CO2 equivalent (tCO2e) from
render qualifying ICCs to offset up to 5% of their tax- able emissions. To source eligible credits, Singapore has negotiated bilateral implementation agreements under Article 6 of the Paris Agreement with various countries such as Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda and Paraguay. These agreements establish frameworks for the trans- fer of carbon credits generated from carbon mitigation projects aligned with Article 6 of the Paris Agreement. Key features include: • the establishment of a joint committee between Singapore and each host country; • a process for authorisation and corresponding adjustments; • a requirement that 5% of proceeds be contributed towards host countries’ climate adaptation efforts; and • a provision that 2% of credits are cancelled at first issuance to achieve a net reduction in global emis- sions. Credits generated under these agreements can be used for offsetting under the Singapore carbon tax or towards nationally determined contributions. Practically, supply of qualifying credits remains lim- ited because carbon mitigation projects typically take up to four years to generate tradeable credits from inception. Recognising this lag, Singapore’s National Environment Agency has allowed facilities to roll over their unutilised 5% ICC offset quota from one emis- sions year to the next, providing flexibility while the market matures. Deploying Geothermal Energy Systems in Singapore In mid-2026, the EMA issued a RFP seeking a com- prehensive study to assess the feasibility of deploying geothermal energy systems in Singapore. The study’s scope covers the technical, environmental and com- mercial viability of next-generation geothermal sys- tems. The appointed consultant will also be tasked with identifying areas for further study and proposing policy frameworks for potential geothermal projects.
2019 to 2023 (transitional period). • SGD25/tCO2e in 2024 and 2025. • SGD45/tCO2e in 2026 and 2027. • A target of SGD50–80/tCO2e by 2030.
Complementing the domestic carbon price, Singapore has built an international carbon credits (ICCs) frame- work. Since 1 January 2024, taxable facilities may sur-
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