The transformation of traditional energy market models

By Koh Hui Shan

Intermittent energy supply is creating real challenges for traditional energy market models, said Tony Wood, Energy Programme Director at the Grattan Institute, during a roundtable hosted by Grattan Institute at Singapore International Energy Week (SIEW) on “The Future Electricity Grid: Challenges and Opportunities”.

The energy sector needs to prepare itself as changes are bound to come. “Regulators need to keep up with change,” said Arthur Hanna, Senior Advisor to the CEO of the World Energy Council. Hanna cautioned that as we try to understand the challenges, we need to look into history and legacy, and consider issues unique to the local context.

Dr Alvin Yeo, Director of Industry Development, Energy Market Authority (EMA), said that nimble government policies are important for the integration of new business models. Infrastructure changes could also be needed to enable new technologies.

There will still be a role for wholesale, retail and ancillary markets in the future. The question is how the industry can set the right pricing signals and provide transparency and predictability to investors. Hanna shared that Denmark is building capabilities in data analytics for instance in the area of demand forecasting which could help to shed some light.

The other part of the equation is what it really means for consumers on the demand side. Increasingly, security of supply becomes imperative for governments and the network operators. Should consumers prefer the use of clean renewables, or energy storage solutions, the industry must be able to meet such demands. The panel discussed how the electricity network may not be able to avoid “Uber-ising”.

Yeo said “Singapore is giving a greater push to demand side management solutions” and underlined the importance of consumer education and awareness through clear and simple communication. Alistair Parker, Executive General Manager, Regulated Energy Services of AusNet Services added that it would not be easy given the short time consumers spend thinking about such issues.