As talks with Indonesia stall, Singapore seeks other green energy sources: ‘the clock is ticking’

Despite signing agreements and a US$37 billion ‘Green Corridor’ in Indonesia, a history of turbulence clouds Singapore-Jakarta energy relations
Indonesia wants to add value to its industries, experts say, as Singapore risks over-reliance on foreign suppliers for yet another critical resource

Singapore

Amy Sood

Published: 5:12pm, 31 Jul 2023

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Singapore is seeking alternative sources of green-energy imports to meet its ambitious climate goals, as talks with Indonesia continue to stall.

Officials from Singapore have already started visiting other countries, mostly around Southeast Asia, to secure supplies of renewable energy, said Senior Minister Teo Chee Hean.

Speaking to Indonesian news outlets in Singapore earlier this month, Teo said the country was looking for sources of green electricity “not just from Indonesia”. He said a number of Australian companies were also interested in supplying green electricity to the city state.

Singapore aims to achieve net-zero carbon emissions by 2050, but its small size and location present challenges for domestic production of renewable energy.

This lack of space means wind, geothermal and hydroelectric generation are not feasible, and neither are big solar farms. Also, rooftop solar panels only generate limited amounts of energy.

Singapore remains heavily reliant on natural gas that accounts for 95 per cent of its electricity. But this leaves the city state vulnerable to price shocks, such as when gas prices spiked in the aftermath of Russia’s invasion of Ukraine.

With renewable sources accounting for less than 4 per cent of Singapore’s power, experts say the island republic is racing against time to secure deals to diversify its green-energy sources and meet its decarbonisation targets.

“Every country right now is working on a very tight timeline commitment for its climate goals,” said Putra Adhiguna, an energy specialist with the Institute for Energy Economics and Financial Analysis (IEEFA).

“Singapore is aiming for about 4 gigwatts of low-carbon electricity by 2035. So the clock is ticking, and they’re really looking to make developments as fast as possible.”

Workers make solar panels in Singapore. Renewable sources account for less than 5 per cent of the city state’s power mix. Photo: AFP

Mixed signals

Singapore signed a memorandum of understanding on renewable-energy cooperation with Indonesia in March.

Major energy developers and corporate partners based in Singapore also invested US$37 billion in a “Green Corridor” located in Indonesia’s Riau region, which includes islands that are located less than 20km away from Singapore.

But a history of turbulence clouds energy relations between the two countries.

In 2011, an Indonesian senior minister unexpectedly called for a reduction in gas exports to Singapore, while in 2020, Indonesia announced plans to terminate one of the two gas pipelines to Singapore by 2023. The contract was ultimately renewed in late 2022.

Indonesia banned exports of renewable energy last year to preserve green power for its domestic industries.

This came as a shock to the numerous Singaporean firms who had already signed deals with their Indonesian counterparts to generate renewable energy in Indonesia and export it to the city state, experts say.

A woman uses her mobile phone to take a video in Jakarta. Indonesia banned exports of renewable energy last year to preserve green power for its domestic industries. Photo: AP

In May, Indonesia’s Minister of Maritime Affairs and Investments Luhut Pandjaitan appeared to reaffirm the ban, saying that if Singapore wanted the suspension fully lifted, it could build renewable components factories in Indonesia.

“There have been a number of MOUs and a number of plans outlining industrial park establishments, but until we see factories being built or plans finalised, it might be hard to feel a sense of assurance or stability,” Putra said.

There are concerns in Singapore, which already relies heavily on neighbouring Malaysia for water supplies, that it may again become too dependent on foreign suppliers for yet another critical resource.

Exporting green power does not contribute towards Indonesia’s climate goals, only Singapore’s

Fabby Tumiwa, energy-transition strategist

But experts say that Indonesia wants to see some value added to its domestic industries.

“The Indonesian government has seen that Singapore benefits a lot from [Indonesian] imports of energy. It is reducing their carbon footprint and also boosting the competitiveness of their industries by using decarbonised power,” said Fabby Tumiwa, executive director at the Institute for Essential Services Reform think tank and an energy-transition strategist.

“The question is, how can Indonesia benefit? Exporting green power does not contribute towards Indonesia’s climate goals, only Singapore’s.”

Competitive advantage

Singapore is already buying hydropower from Laos, and a recent proposal could see the city state sign its largest cross-border electricity contract to date, allowing it to import 1GW of renewable energy yearly from Cambodia.

Its energy import plans extend to Australia, where billionaire Mike Cannon-Brookes said in May he would revive a stalled US$20 billion plan to export solar power from Australia to Singapore after acquiring the assets of a failed Sun Cable project.

But what makes Indonesia an ideal trade partner is its proximity to the city state. Cross-border transmissions across multiple countries can be expensive, and come with more red tape. Experts say sending electricity through long undersea cables is also risky.

“If Indonesia is prepared to export green electrons to us, we are prepared to buy,” Minister Teo said, adding that Singapore was more than willing to purchase the electricity at international prices.

Energy-transition strategist Fabby said: “Indonesia has a competitive advantage because [it is] closer to Singapore. And the cost of transmission is cheaper, and energy security is much better, if you have only a few kilometres of transmission.”

But Indonesia might also have a competitor in Malaysia, which lifted its ban on renewable energy exports in May hoping to export billions of dollars of renewables to Singapore.

“For Indonesia and Singapore to progress through this, they really need to be able to find a middle-ground, or a win-win situation for both countries,” said IEEFA’s Putra.

“On the Indonesian side, it needs to be able to display the ability to become a reliable trading partner, because this whole discussion about cross-border export of electricity really requires strong political stability and political commitment.”