2024 Update - Energy Storage Systems (“ESS”) in Singapore

Quick background

Singapore has one of the most reliable electricity grids in the world. However, as Singapore looks to renewable energy and power imports to transition to a low-carbon energy system, and moves towards the electrification of its transport system, it is increasingly vital to ensure that its grid infrastructure remains stable and resilient. The Singapore government has implemented a good number of initiatives to ensure the resilience of the energy grid, including the use of energy storage systems (“ESS”).

Grid-scale ESS comprise of batteries and technologies connected to the power grid that can store energy and then supply it back to the grid as needed – for example, at night, when no solar power is available, or at times when electricity generation is disrupted. The Energy Market Authority (“EMA”) has, for instance, commissioned Sembcorp Industries to build, own and operate the largest ESS deployment in South-East Asia, and one of the fastest of its size to be deployed. However, Singapore critically needs the technology and the innovative urban deployment topologies that can enable a wider deployment of ESS to match the rise of renewable energy to meet the ever-increasing energy demand.

In Q4 2023, the EMA had put out a grant call to invite proposals for facilitating the wider deployment of ESS in Singapore. It is instructive to note that while grid-scale ESS needs to scale, there remain various challenges to ESS deployment, including the need for ESS solutions that are safer, denser and/or more cost-effective. Market disruptions and intense competition from electric vehicle makers have also led to rising costs for key minerals used in battery production, notably lithium. EMA has also implemented the ACCESS programme which looks at securing space, matching demands with solutions, and facilitating regulatory approvals for ESS deployment in Singapore.

Singapore Regulatory landscape

At the time of this article, there are no specific customised laws for ESS.

The Electricity Act 2001 regulates the licensing requirements and market participation and settlement for ESS. The ESS acts as a generator and depending on its name-plate capacity, it may be required to be licensed as a wholesaler or a generator. An electrical installation licence will also be required for all non-domestic electrical installation with approved load exceeding 45kVA.

In addition, the following regulations may be applicable:

• Electricity (Electrical Installations) Regulations: covering the requirements relating to electrical installations, such as the engagement of a licenced electrical worker of an appropriate class, the use of apparatus which are compliant with the relevant standard or specification issued by the Enterprise Singapore Board.
• Electricity (Electrical Installations — Exemption) Regulations 2021: setting out exemptions relating to electrical installations.

A myriad of other laws also apply / potentially apply to ESS. These include:

• Fire Safety Act 1993: covers the requirements relating to fire safety and regulations pertaining to the import, transport and storage of flammable materials, including compliance with the Code of Practice for Fire Precautions in Buildings (“Fire Safety Code”).

• The Fire Safety Code: setting out the fire safety requirements to ESS which exceeds certain thresholds of stored energy.
• Ancillary Codes: The Fire Safety (Alarm Monitoring Services) Regulations 2020; Fire Safety (Emergency Response Plan) Regulations; Fire Safety (Petroleum and Flammable Materials) Regulations may also potentially apply, depending on the ESS deployed.

• Workplace Safety and Health Act 2006: regulating exposure to flammable materials at workplaces, and requires the conduct of risk assessments to identify and control WSH risks (such as the risk of fire) and the implementation of risk control measures for dealing with emergencies.

• Workplace Safety and Health (Risk Management) Regulations: setting out regulations on conducting risk assessments and the elimination and control of risk.
• Workplace Safety and Health (General Provisions) Regulations: setting out regulations for protecting workers and employed persons against hazardous substances (including flammable materials).
• Other subsidiary legislation: WSH (Construction) Regulations 2007; WSH (Confined Spaces) Regulations 2009.

• Environmental Public Health Act 1987: codifies the stringent requirements governing public health-related matters

• Environmental Public Health (Toxic Industrial Waste) Regulations: setting out regulations on the handling, transportation, treatment and disposal of Toxic Industrial Waste (TIW). Decommissioning for Lithium-ion batteries for instance would likely require modules to be packaged and transported as hazardous materials, before manual disassembly then multi-step processing for materials recovery. The significant end-of-life impact of ESS cannot be underestimated and left unplanned.

Prospects and Pricing

In its policy paper, EMA helpfully considered the potential role of ESS in the Singapore power system. ESS can be used to (i) integrate higher levels of solar PV and manage variable output as solar adoption increases; (ii) shift peak load and arbitrage electricity prices; (iii) provide ancillary services to the market for frequency regulation and backup reserves; (iv) serve as an alternative to enable deferment of traditional grid investments to meet periodic peaks in demand, thus driving efficient grid investments; and (v) provide voltage regulation services.

For the time being, we consider that ESS’ greatest utility may lie in the following:

• Provision of market services. ESS can provide in-front-of-the-meter services (i.e. services provided to the grid) such as frequency regulation and spinning reserves. EMA cited the example of the Hornsdale Power Reserve in Jameston, South Australia. The 315 MW Hornsdale wind farm is co-located with a 100MW/129MWh battery. It participates in all competitive energy and ancillary services markets and also receives fixed payments to provide critical grid reliability services.
• Provision of end-consumer services. ESS can be installed within consumer premises and provide behind-the-meter services (i.e. services provided to the energy consumer). For example, ESS could be used to avoid peak electricity prices by arbitraging the price of electricity during off-peak and peak periods, as well as to provide uninterruptible power supply (UPS) services.

It may be that regulations will be put up in due course, for ESS to fulfil their designated role/s in the Singapore power system. This would likely deal with metering and billing arrangements, compensation structures or mechanisms, and controls to safeguard consumers’ interest.

This article is produced by our Singapore office, Bird & Bird ATMD LLP. It does not constitute legal advice and is intended to provide general information only. Information in this article is accurate as of 21 January 2024. 

Authors: Sandra Seah (Partner), Terrance Goh (Associate)