Mr S Iswaran, Minister in the Prime Minister's Office and Second Minister for Home Affairs and Trade & Industry, shares Singapore's energy best practices at the World Future Energy Summit in Abu Dhabi. (Photo credit: Reprinted with the permission of IISD/Earth Negotiations Bulletin)

The reality check for Singapore may sound daunting--few natural resources and even fewer alternative energy sources. However, the city-state believes it can still contribute much to the global renewable energy efforts.

At the 5th World Future Energy Summit (WFES) held in Abu Dhabi this week, Mr S Iswaran, Minister in the Prime Minister's Office and Second Minister for Home Affairs and Trade & Industry, announced that Singapore is seeking membership in IRENA.

The International Renewable Energy Agency is an intergovernmental organisation and key global platform for the promotion of renewable energy. The US and EU are among the 84 members under IRENA, which held its Second Assembly at WFES earlier this week to discuss how to accelerate renewable energy deployment in the fossil fuel-dependent region.

According to Minister Iswaran, membership in IRENA will allow the city-state to "raise its level of participation in the global clean energy dialogue and learn from the experiences of other countries". He added that Singapore can "further build up knowledge and expertise in renewable energy" to "mitigate its energy constraints and collaborate with the global community on the development of renewable energy technologies and initiatives".

(Photo credit: CPC media office)

Aside from the announcement, Minister Iswaran also shared with world leaders during the Ministerial Panel the role that government institutions can play in moving towards a global clean energy economy. He also spoke on the judicious balance needed between public policy and private-sector initiatives in order to find a balance between economic competitiveness, environmental sustainability, and energy security for Singapore.

Meanwhile, the WFES experience will be brought to Asia this year for a regional audience, with the Asia Future Energy Summit debuting under the SIEW marque on 22-25 October. A transcribe of Minister Iswaran's presentation at WFES can also be found here.  The press release on Singapore seeking IRENA membership is here.

(Picture credit: EMA)

The deal sealed at the recent Durban climate change talks to develop a legally binding climate agreement holds much promise, but more immediate policy action and collaboration is crucial to ensure the sustainable growth of the energy sector. This was one of the key messages from Dr Fatih Birol, Chief Economist of the International Energy Agency (IEA), who was in Singapore on 14 December 2011 to present the highlights from the recently launched World Energy Outlook (WEO) 2011.

Dr Birol was not optimistic about the prospects for the energy sector given the economic and geopolitical landscape, especially in the face of a looming threat of a second dip in the global economy.  Budget deficits, unemployment and social problems were diverting governments' attention and funding away from energy issues and clean technologies.  To make matters worse, the turmoil in Middle East and North Africa (MENA) had raised perceived risks of investment in the region. Should the production levels in MENA not be able to meet rising demand due to delays in capital investment, this could lead to a surge in oil prices and diversion of market share away from the region in the long run.

In the short to medium term, coal would continue to dominate the fuel mix, while natural gas and renewables were likely to be the key drivers of growth. However, more international collaboration and oversight was necessary to ensure sustainable growth of these sectors.  Turning to nuclear power post-Fukushima, Dr Birol said that a slowdown could increase the cost of energy imports, reduce diversity of the fuel mix and make it harder and more expensive to mitigate the effects of climate change.  The impact would especially be felt on countries that rely heavily on nuclear energy.

Dr Birol stressed that international policy debate must include the new players as the emerging economies were projected to account for more than 50% of increase in global energy demand.  According to Dr Birol, "Energy decisions in Beijing, Delhi and Moscow will impact the rest of the world".  He recommended reading China's five-year plan for anyone seeking to understand China's energy policies and how they would impact on the global market.

Before concluding his presentation, Dr Birol mentioned that based on IEA's projections, the window for action towards meeting the 2 degrees Celsius climate change goal is fast closing. Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario will be "locked-in" by existing power plants, factories, buildings, etc. He called on governments to take affirmative action quickly as it would only be more challenging and expensive by the year.

The World Energy Outlook is the IEA's flagship publication and is widely recognised as the most authoritative source for global energy projections and analysis

(Picture credit: EMA)

SPEECH BY MR S ISWARAN, MINISTER, PRIME MINISTER'S OFFICE AND SECOND MINISTER FOR HOME AFFAIRS AND TRADE & INDUSTRY AT THE OPENING CEREMONY OF THE EXPERIMENTAL POWER GRID CENTRE ON TUESDAY, 1 NOVEMBER 2011, 1000HRS AT ICES JURONG ISLAND

Mr Lim Chuan Poh, Chairman, A*STAR
Distinguished Guests,
Ladies and Gentlemen,
A very good morning,

Introduction

I am pleased to join you today for the opening ceremony of A*STAR's Experimental Power Grid Centre (EPGC).

Smart Grid, a Critical Component in a Smart Energy Economy

A large proportion of the world's electricity runs on power systems that were built over 50 years ago.  The stability of these systems is affected by numerous challenges stemming from ageing infrastructure and surging energy demand.  Coupled with an increasing drive to utilise clean energy solutions - which are often intermittent in nature - countries are finding it difficult to ensure the reliability, security and efficiency of their grids.

In response, governments around the world are developing intelligent and more efficient power grids, otherwise known as "smart grids".  Using advanced digital and two-way communication technologies, smart grids can increase operating efficiency and speed up the response to power imbalances and energy volatility.  This, in turn, will reduce the cost of electricity for consumers.  Smart grids will also increase grid reliability and reduce carbon emission by making the integration of clean energy sources and distributed generation possible.  It is estimated that by 2015, the global smart grid market will total US$16 billion, representing a compound annual growth rate of more than 25 per cent.

While Singapore already has a robust and reliable power grid, we are investing ahead in smart grid technologies as part of our efforts to build a Smart and Innovative Energy Economy.  Smart grids will pave the way for a competitive energy market.  Its technologies will enable us to offer services that allow businesses and households to choose their electricity retailers and packages according to their needs.  Smart grid technologies will also provide consumers with real-time information on their energy usage.  Such information will allow consumers to make informed choices on how to use energy efficiently and save cost.

An Essential Infrastructure for Singapore's Research and Development in Smart Grids - Singapore's Marked Progress in Energy R&D

The S$38 million, one megawatt Experimental Power Grid Centre (EPGC) is a major Government investment in the development of a smart grid industry in Singapore.  It also marks a significant milestone in Singapore's 20-year R&D journey since we established the first National Technology Plan in 1991.  EPGC will leverage on a wide spectrum of A*STAR research capabilities to develop innovative solutions and products, to save energy costs and reduce carbon emissions, while ensuring high reliability and quality.

With this facility, researchers and companies can experiment with novel energy technologies in a safe grid-like environment to evaluate their performance and reliability, before deploying them to "live" operational power grids.  At the same time, with its ability to simulate the behaviour of renewable energy sources under various weather conditions, EPGC will also serve as a natural technology partner for companies which are exploring the integration of renewable energy sources in any climatic zone.

By offering a highly customisable platform, EPGC provides a unique value proposition which is attractive to both overseas and local industry partners.  EPGC already is collaborating with Vestas, the world leader in wind technology, to co-develop technologies to enhance the capabilities of wind turbines.  EPGC is also collaborating with SP Power Grid (SPPG) to further improve the reliability of our grid and help to improve the integration of distributed energy generation by looking for ways to address fault current issues.  Such collaborations will open up business opportunities in new markets for the integration of renewable energy and distributed energy generation.

EPGC, a Catalyst in the Development of Smart Grid Industry in Singapore

The smart grid industry is multi-faceted, involving different players in various sectors.  Beyond the immediate power grid industry, EPGC is also relevant to other domains, such as the marine and offshore sector.

In particular, EPGC has been leveraging on its capabilities in power and electrical engineering to develop micro-electrical grids on ships and offshore platforms.  In that regard, I am pleased that EPGC has again demonstrated its strong industry relevance through its recent agreement with Rolls Royce, a global systems provider, to jointly undertake research on marine grid systems.

Beyond direct industry engagement, EPGC will also deepen its collaborations with various local stakeholders such as its partner agencies – the Economic Development Board (EDB), Energy Market Authority (EMA), JTC Corporation (JTC), and National Environment Agency (NEA).  Some of these partnerships are already in place.  EPGC has been working with EMA in the development of the Experimental Power Grid facility.  Later this morning, EPGC will be signing an MOU with the Housing and Development Board (HDB).  This collaboration aims to address the technological challenges in assimilating distributed energy generation and electric vehicles into housing estates.

Together with other on-going smart grid initiatives such as the Intelligent Energy System (IES) pilot project by EMA, EPGC will play an important role in growing the smart grid industry here in Singapore.  EPGC will work closely with EMA to develop an intelligent micro-grid infrastructure with clean and renewable energy technologies on Pulau Ubin.  EPGC will also explore collaborations with EMA to study the impact of intermittent renewable energy on the stability and reliability of the grid.

The opening of EPGC is a landmark in Singapore's efforts to play a leading role in the development of smart grid technologies.  The journey of EPGC began at a ground breaking ceremony just fifteen months ago, and I am glad that EPGC has already shown strong good progress, especially in its engagement with industry partners.  This is evident in the MOUs that EPGC will be signing later this morning with partners like SPPG, National Instruments and Meiden.  I congratulate A*STAR and EPGC on this exciting new milestone and wish you a fruitful journey ahead.  Thank you.

Dr Michael A Levi is the David M Rubenstein Senior Fellow for energy and the environment and Director of the Program on Energy Security and Climate Change for the Council on Foreign Relations (CFR). His research interests centre on energy, climate change, nuclear arms control, and international security. Dr Michael Levi will be a speaker at the Singapore Energy Summit.

Q1. IEA's Chief Economist Dr Fatih Birol believes the "door to 2 degrees Celsius may be closing" soon. Is this something you subscribe to, and how can governments balance the twin challenges of climate change with energy security?

Michael Levi: The basic sentiment that some of the most ambitious goals for mitigating climate change are becoming increasingly implausible strikes me as correct. But I don't think it's right to think of this as "the door to 2 degrees" slipping away. The sorts of emissions targets that diplomats tend to talk about, such as halving emissions by mid-century, are only tenuously connected to the 2 degree target in any case. It's more useful to observe that we're increasing the risks of an ever warmer world through our inability to take strong action on climate change. There's no question that that's true.

Balancing climate change and energy security requires a case-by-case approach. Not every policy needs to be a "win-win". But it's important to avoid developments that are potentially catastrophic for one side of the equation or the other. We'll need to end up with different balances in diverse areas such as unconventional oil, coal-fired electricity, and nuclear power.

Q2. Recently, you blogged about why methane doesn't matter, particularly if the world is focused on limiting climate change to the 2 degrees Celsius warming target. Is gas, particularly unconventional gas, the way to go as a bridging fuel?

ML: First a clarification: I don't think that methane doesn't matter. It certainly does. I do believe, however, that methane leakage from natural gas production isn't a first order matter when deciding whether more natural gas is a good or bad thing. The focus of that judgment should be on the economic benefits and climate impacts.

Gas can play an important role as a bridge fuel, but it's essential that the bridge have two sides. Simply replacing coal with gas won't do the trick--the medium- and long-term emissions are too high. If gas can displace coal, and then itself be displaced by zero carbon options, then that will be valuable. Replacing coal with gas also has important benefits for public health.

Q3. What do you imagine the world would be like without nuclear power? Can we truly live without nuclear power, and do you hold with WWF's forecast that the world's energy needs could be met almost through renewables by 2050?

ML: Anyone who says they know what is possible in 2050 is kidding themselves. What we need are options; if we're lucky, some will be able to provide us with low-carbon energy on a massive scale. Could we do without nuclear in 2050? Perhaps. I wouldn't want to bet all of our energy investments on it, though.

Q4. While there has been a lot of innovation and development in the clean energy space, it is still a long way from replacing dependence on traditional fossil fuels. In your opinion, what else needs to be done--by both the public and private sectors--to push this along?

ML: Only the private sector has the scale of resources that will be required to commercialise game-changing energy innovations. But they can't, or at least won't, do it alone. Government has a critical role to play, both in creating markets for low-carbon energy and in supporting innovation directly. Perhaps the trickiest part of this equation is dealing with the so-called "valley of death" between research & development and full commercial deployment. Supporting technologies through this stage requires government support for individual companies, something governments don't have a great track record of doing well.

The alternative, though, is to take a big risk that the private sector won't deliver. Faced with twin risks, I'd like to see governments at least try to play an active and constructive role in this part of the innovation process.

Q5. Even as Asian economies continue to boom, energy consumption is growing apace--particularly for China and India--causing a strain on energy resources. Are there lessons from Europe and/or the US that Southeast Asia can learn from in terms of lowering its carbon emissions through low-cost, even no-cost, energy efficiency and conservation measures?

ML: Simplicity is king. US automobile fuel economy standards have been powerful drivers of greater efficiency, but added complexities have almost invariably led to inadvertent loopholes that undermined their effectiveness. Today, US car makers build thousands of flex-fuel vehicles and sell them in states where no ethanol is available. They do that because a quirk in US fuel economy standards allows them to avoid improving their vehicles' fuel efficiencies as a result.

It's also worth observing that no-cost policies can only get you so far. Even if the US adopted all of the efficiency policies that are in place in Europe, America's emissions would still be too high. Dealing with emissions doesn't have to be prohibitively expensive, but it isn't free, either.

Michael Liebreich is Head of the Bloomberg New Energy Finance, the leading provider of information and research to senior investors, executives and policymakers in clean energy and the carbon markets. He founded the company in 2004 and acted as Chairman and Chief Executive until its acquisition by Bloomberg at the end of 2009. Liebriech will be a speaker at the Singapore Energy Summit 2011.

Q1. Can you tell us a bit about current clean energy investment trends in the Asia Pacific?

Michael Liebreich: 2010 saw Asia as a whole nearly overtake Europe to become the leading region for clean energy investment. Only the surge in rooftop solar installations in Germany prevented that from happening. In 2011, Asia will probably lead the world for investment, driven by continuing significant funding commitments in China. Companies in South Korea and Taiwan have started to make significant investments in technology, particularly in solar, smart grid and batteries. India has woken up, with its ambitious Solar Mission. And Japan has rededicated itself to clean energy in the wake of Fukushima, passing a renewable energy feed-in tariff law very recently. So Asia is the most dynamic region right now.

Q2. What are some of the key challenges in securing financing for solar and wind power projects?

ML: The biggest challenge is uncertainty about domestic energy policy almost everywhere in the world. Prices for clean energy have come down dramatically--solar photovoltaic equipment is 70 percent cheaper now than it was just three years ago; in Brazil, wind power developers are bidding for contracts to build projects at US$6.2 cents per kWh, below the cost of gas. So the issue is not cost any more, it's just knowing that whatever support mechanisms or regulatory frameworks there are, will stay in place long enough for investors to earn the returns they need. The experience of Spain and Czech Republic, where there were retroactive changes to the tariff regime, really destroyed mainstream investors' confidence in the sector. It was a disaster.

Q3. What is the prospect for an APAC-wide carbon exchange?

ML: I would say nil. There is little or no momentum behind the drive for carbon markets worldwide. The EU-ETS is here to stay, as are the smaller markets in New Zealand and New England--though even there some states have defected. China is still talking about instituting a market by 2014 or 2015, and California is still looking to set up a market. But ever since Copenhagen, the global climate negotiations have shrunk to technical discussions about investment in slower-developing countries, forestry and technology transfer--even the most idealistic dreamers have realised that there will never be a global price on carbon. Progress on climate is now being supported by far more granular regional, national, and sub-national legislation. For the APAC region to introduce a carbon price would be going against the tide of history.

Q4. What do you see as the greatest risks for investors with renewable energy projects and how do you advise that they mitigate these risks?

ML: The biggest risk is local regulation. Generally, once you have a project up and running, investors have done pretty well. The risk is really that you do a lot of work developing a project, and then don't get planning permission, or they change the prices for clean energy at the last minute, or the grid operator refuses to connect up the project.  All of these risks can be managed by working in countries and regions which have a solid long-term commitment to clean energy development. Germany just hit a new record of 21 percent of its electricity being renewable for the first half of 2011. They didn't get there by changing the rules every six months. A lot of Asian countries have made all the right noises about clean energy. But now they need to work on the details: Straightening out planning processes, mandating utilities to buy clean energy, and forcing grid operators to connect up projects.

Q5. What do you foresee as the catalyst for a global paradigm shift towards adoption of ubiquitous renewable energy?

ML: I think the global paradigm shift is already happening. Look at the clean energy penetration in Germany, Spain, Denmark, even Texas. Look at the investments being made in China. And then look at what is going to happen in the next decade. Solar costs will go down by another 50 percent. Wind costs will go down by another 25 percent. GE is looking at producing a 15 megawatts wind turbine. LED light bulb costs will go down by 90 percent. Smart grids will be pervasive. The cost of managing intermittency will go down by 75 percent.  Battery costs will go down by 75 percent, so there will be electric vehicles everywhere and grid-scale storage. The combination of wind or solar and an electric vehicle is a game-changer.

Meanwhile, fossil fuels remain polluting and dangerous, and they get more expensive and risky.  So the paradigm shift is happening. The question is, what could speed it up? The answer lies in the power of knowledge. When consumers, businesses, politicians and regulators wake up to the inevitability of the shift, then everyone will realise they have to be part of it. Right now, there is so much energy being expended trying to preserve a status quo that has become totally dysfunctional, out of fear that there might be nothing to replace it. If we don't let Exxon run riot in the Arctic, our standard of living will collapse. That's nonsense. And when it is recognised as such, the world will get down to the nuts and bolts of swapping out dirty energy for clean, which is a manageable engineering and finance process.