If you’re a solar homeowner in Singapore and are frustrated over your export rates decreasing overnight, you are not alone. The drop in export rates is closely tied to a sharp decline in the USEP price Singapore has faced over the past two months. The Energy Market Authority (EMA) recently implemented changes aimed at stabilising electricity prices and ensuring adequate supply amid current global and local challenges. In this article, we will explore these changes in detail, uncover the reasons behind the falling USEP price Singapore, and provide actionable tips for homeowners to maximise their savings in light of these developments.
First, What Exactly is USEP?
USEP is an acronym for Uniform Singapore Energy Price, which is the half-hourly energy price in the Singapore Wholesale Electricity Market. The USEP price Singapore is dictated by demand & supply in this open market, which led to significant peaks during the global energy crunch. Understanding the fluctuations of the USEP price Singapore is crucial for solar homeowners, as it directly impacts their solar energy exports and overall savings.
How Has USEP Price Singapore Changed Recently?
f you are currently a solar homeowner signed under the Enhanced Central Intermediary Scheme (ECIS) – simply put, signed on to an OEM retailer apart from SP Group, your solar energy surplus is paid at prevailing half hourly wholesale energy prices, which mirror the USEP price Singapore.
Over the past two to three months, daytime USEP prices in Singapore have dropped to some of their lowest levels, settling between $0.10–$0.13/kWh, which has been upsetting for solar homeowners. Although prices have started recover in October, reaching $0.20/kWh, the volatility of the USEP price Singapore remains a key factor to monitor,as shown in the chart below
Stay informed,join our Telegram community where we share updates on the USEP price Singapore, tips for maximizing solar savings, and solutions like our Rent-to-Own program.
Reference : GetSolar
Key Reasons Behind Falling USEP Price Singapore
This is due to two mechanisms implemented by EMA, namely the temporary price cap in the Singapore Wholesale Electricity Market (SWEM) as well as implementation of a new vesting framework. These mechanisms are primarily targeted to reduce volatility of prices in the market as well as to ensure supply of electricity to non-contestable consumers can be met.
Temporary Price Cap
The temporary price cap (TPC) was introduced by EMA on 1st July 2023 in response to situations like the global energy crisis where periods of high and sustained volatility in the Singapore Wholesale Electricity Market were observed.
The TPC, as described by EMA, will act as a “circuit breaker” that is activated only during such periods of high and sustained volatility in the SWEM. Once volatility returns to normal levels, the TPC will be deactivated.
If you are concerned about how long the TPC will last after being triggered, EMA assures that the TPC will also only be online for brief periods of time when activated. For context, the TPC would only be active for less than 5% of energy trading periods if this measure were to exist during the global energy crisis from January 2021 to September 2022.
New Vesting Framework
EMA have also replaced their previous vesting contract regime and introduced a new vesting regime framework to replace expired vesting contracts, which were phased out from 1 January 2017. This new vesting regime framework is slated to be in place from 1 July 2023 until 30 July 2028.
How does the new vesting framework work?
The new vesting framework helps ensure a stable electricity supply for non-contestable consumers (NCC), who pay regulated tariffs. To meet this demand, SP buys electricity from the Singapore Wholesale Electricity Market (SWEM) at the USEP price. However, to prevent sudden price spikes, SP also relies on contracts with electricity generation companies (gencos), called vesting contracts.
These contracts act as a safety net, ensuring SP can buy electricity at stable prices, even if USEP prices increase sharply. The vesting framework, which runs from 1 July 2023 to 30 June 2028, includes three schemes that allow EMA to allocate electricity quantities efficiently and maintain price stability.
Base Vesting Scheme (BVS)
The base vesting scheme is the first vesting scheme that EMA uses. EMA allocates a base vesting quantity (BVQ), which is set in megawatt hour (MWh). This amount is determined based on equivalent quantities between the Daily Contracted Quantity (DCQ) level and the Maximum Daily Contracted Quantity (MDQ) level.
Tending Vesting Scheme (TVS)
Situationally, EMA may, from time to time, tender out portions of the NCC load. A Tenderer whose Tender Offer has been accepted by EMA may source for its own fuel supply to fulfil the awarded Tender Vesting Quantity (TVQ).
Residual Vesting Scheme (RVS)
Finally, for a given half-hour period, there may be residual/unhedged NCC load that was not hedged by prevailing hedge quantities under the BVS, TVS and any new scheme EMA may from time-to-time introduce.
To ensure the required NCC load is hedged, each Holder of BVQ and/or TVQ is required to participate in the RVS. Under the RVS, the Holder will use up to its excess generation output (if any) that is uncontracted and generated using its own term gas supply to hedge any Residual NCC Load.
To understand more about electricity pricing and solar sell-back options, check out our Guide to Electricity Saving & Solar Sell-Back in Singapore.
How does this affect USEP?
Vesting contracts remove incentives for generation companies to exercise their market power. Without vesting contracts, companies may choose to withhold supply to push up the half-hourly wholesale electricity prices in the wholesale electricity market for their own benefit. However, with vesting contracts, companies are able to ensure they can reliably sell electricity generated to SP at competitive prices, thereby reducing the incentive for market manipulation.
This ultimately helps prevent USEP from peaking in price, and can cause prices to fall as observed in the previous 2 months.
Why USEP Price Singapore Matters for Solar Homeowners?
From our point of view, it is highly recommended to start watching out for when your contract terms are coming up, and consider switching back to SP. If you are switching to SP, do remember to fill up a new Net Export Rebate form and submit it through your retailer. This can be done with assistance from your solar installer.
In terms of electricity plans, EMA encourages consumers to buy electricity either through long-term contracts from electricity retailers such as Tuas Power, Senoko Energy and Sembcorp Power, or from SP Services at the regulated tariff if applicable, for greater price stability and certainty.
Peak and non-peak plans such as PacificLight are also viable choices to consider for maximising savings, since night time rates are typically cheaper in price. This synergizes well with the fact that solar generation dwindles at night, in addition to increased electricity consumption after working hours
Evident from the chart below, solar generation (yellow graph) typically falls to zero after 6pm, in contrast to average household energy consumption patterns (grey graph) which increase after 6pm, up to approximately 1.50kWh.
Trends of household energy consumption against solar generation
Not A Solar Homeowner Yet?
If you are interested in solar but not sure where to start, you can consider giving our solar simulator a go. Through the solar simulator, you are able to generate a free, online quote for your home with zero obligations. You’ll also be able to explore different solar price plans, such as our Rent-To-Own offer which allows landed homeowners in Singapore, for the first time, to own a solar panel system with zero upfront cost. To start, simply click the button below and you’ll be well on your way!
