By switching to solar power, excess generated power can be sold back to the grid, thereby allowing solar system owners to earn credits. There are three main ways to selling excess generated power back to the grid:
The MP Scheme is available for larger commercial solar producers, which allow them to register directly with the Energy Market Company (EMC) to sell electricity at market prices.
For residential solar system owners, the applicable schemes would be SCT and ECIS.
The SCT Scheme is designed for residential non-contestable consumers who purchase electricity from SP Group. SCT Scheme allows for predictable credits for exported generated power based on the quarterly tariff rates published by SP Group minus grid charges. Under the SCT Scheme, residential non-contestable consumers stand to sell exported generated power at 75% to 80% of the prevailing tariff rates.
The ECIS Scheme is available to owners (residential and commercial) who have signed on to Open Electricity Market (OEM) electricity retailers, so long the system capacity is under 10MWAC. The credits for exported generated power are based on the fluctuating wholesale Uniform Singapore Energy Price (USEP). The USEP is the wholesale price of electricity determined in the Singapore Wholesale Electricity Market (SWEM).
The USEP fluctuates every half-hour and is determined by various factors, including but not limited to fuel costs, prevailing demand and supply conditions which may fluctuate significantly within the day. Consequently, the credits for exported generated power are less predictable. In general sense, the ECIS Scheme offers potentially higher credits for exported generated power when USEP prices are expected to fluctuate significantly.
Our Energy Market Authority (EMA) has instituted two main mechanisms, resulting in the drop in USEP.
Introduced in July 2023, the TPC was implemented in response to situations resulting in periods of high and sustained volatility in the SWEM e.g. the global energy crises. TPC are generally activated for brief periods of time.
Effective till 30 July 2028, the new vesting framework replaced expired vesting contracts, which have been phased out since January 2017. From time to time, EMA may issue vesting contracts through SP Services, the Market Support Services Licensee (MSSL) for hedging the price of energy to be procured from the Singapore Wholesale Electricity Market (SWEM) for supply to non-contestable consumers.
The vesting contracts are structured as bilateral two-way Contracts-for-Differences between the MSSL and electricity generation companies (also known as “gencos”). SP Services, the MSSL, buys electricity from SWEM at USEP and supplies electricity to non-contestable consumers at regulated tariff rates. In order for SP Services to fulfil this electricity demand by the non-contestable consumers consistently (also known as NCC Load), vesting contracts with several gencos are entered into. Such contracting strategies provide a hedge, should USEP prices rise uncontrollably, and SP Services does not have sufficient cashflow to purchase sufficient electricity from the SWEM. Without the vesting contracts in place, gencos may choose to withhold electricity supply to push up the half-hourly wholesale electricity prices for the respective benefits of the genco.
Hence, vesting contracts aim to enhance economic efficiency in the SWEM by mitigating the exercise of market power by larger gencos. This effectively prevents from USEP from peaking in price.