Why Are Electricity Retailers in Singapore Closing Down? What Does it Mean for Singaporeans?
In October 2017, the Electricity Market Authority (EMA) first announced the Open Electricity Market (OEM) initiative in a bid to liberalise and encourage innovation in the power industry.
In May 2019, all households in Singapore are given the option to switch from the Singapore Power (SP) Group to their preferred electricity provider. Since then, Singaporeans were able to enjoy savings from their electricity bills, as 12 electricity retailers engaged in price wars to obtain market shares.
Who is the Cheapest Electricity Retailer?
Having been following the electricity retailers market since May 2019, Seedly constantly look to keep consumers up to date with the latest price changes and happenings to find the cheapest electricity retailers in the market.
Electricity Retailers in Singapore Are Exiting the Market
Since 14 October 2021, we are starting to see electricity providers exiting the market. Several energy providers have also stopped accepting new clients.
Here’s a quick summary of events with regards to Singapore’s Open Electricity Market (OEM):
|Provider||Date||Event||Number of affected accounts|
|iSwitch Energy||13 October 2021||Ceased entire retail operations||90,000 accounts|
|Ohm Energy||15 October 2021||Ceased entire retail operations||About 30,000 accounts|
|Diamond Electric||15 October 2021||Advised customers to switch to another retailer by 6 November 2021||-|
|Union Power||18 October 2021||Ceased 850 retail accounts||850 accounts|
|Best Electricity||19 October 2021||Ceased entire retail operations||Less than 20,000 accounts|
With numerous electricity retailers exiting the market, we deep dive into some of the reasons leading to these unfortunate events.
In fact, a Seedly Community member actually posted a question in the year 2019, discussion on the saturation of the Open Electricity Market.
Two Types of Companies in the Electricity Market
There are generally two types of retailers in the Open Electricity Market (OEM).
These retailers do not produce their own electricity but buy them in bulk from the wholesale electricity market. They will then sell electricity to consumers in the market.
Gencos are generation companies that produce electricity.
Some of the retailers in the Open Electricity Market are linked to gencos. They are Keppel Electric, Tuas Power, Sembcorp Power, PacificLight, Geneco and Senoko Energy.
Why Are Electricity Retailers in Singapore Exiting the Market?
In case you are wondering why are the electricity retailers dropping like flies, there are a few possibilities on why this is happening.
Take note that almost all of Singapore’s electricity is produced using liquefied natural gas (LNG). Factors affecting the price of natural gas include oil prices, demand and supply for natural gas.
Increase in Global Spot Electricity Prices
As the global market recovers from the COVID-19 pandemic, there is an increase in gas consumption globally which resulted in an increase in demand for liquefied natural gas.
Unexpected large-scale power source outages and extreme weather events have also affected the supply of natural gas worldwide.
All these factors ultimately led to higher wholesale electricity prices which are passed down to the electricity retailers.
Unable to Adequately Hedge
Electricity retailers hedge their positions in the market to give themselves protection against any price movements in the market.
The spikes in Uniform Singapore Energy Price (USEP) also made it difficult for retailers to hedge their positions in the electricity futures market.
What Happens if Your Electricity Retailer Ceased Their Retail Operations?
Fret not if your electricity retailer ceased their retail operations.
Your account will be transferred to SP Group. There will be no disruption to your electricity supply.
What Can Consumers Expect In the Long Run?
As more electricity retailers bow out of the market, there will be fewer the Open Electricity Market (OEM). There will ultimately be a point where a few major players are able to comfortably co-exist with a bit of competition.
While competition in the Open Electricity Market (OEM) may still exist in the long run, consumers might be slightly worse off in terms of pricing as compared to what they were enjoying when there were 12 players competing in Singapore. With that said, it is best to still remain up-to-date with the electricity tariff prices changes to compare the cheapest electricity retailers and best deals they offer.