Firms slash electric bills as Singapore launches live auctions for packages
On average, savings can hit 30% off the regulated tariff after live auctions were launched.
The operator of Singapore’s wholesale electricity market, Energy Market Company (EMC), wanted to cut the time it took companies to find their electricity retailer from one to two months to just 15 minutes when it launched its procurement portal PowerSelect in 2018.
Since the launch of PowerSelect, EMC has successfully conducted over 50 live auctions for businesses in the industries of manufacturing, transportation & storage, accommodation, and food services, shared Liang Ching Tan, senior vice president for business development at EMC.
“On average, these businesses enjoyed savings of about 30% off the regulated electricity tariff (based on prevailing tariff rates at time of auction) when they procured electricity through PowerSelect. Compared against the businesses’ reserve prices (or starting bids for the auctions), the amount of additional savings ranged between 3% and 15%,” he said in an exclusive interview.
PowerSelect allows business to shortlist their retailers based on retailers’ packages as well as their track record of performance. After the round of shortlisting, the retailer that offers the most competitive price in PowerSelect’s 15-minute auction ultimately wins the contract.
He recalled a customer in the Food and Beverage sector which conducted a Live Auction for a Discount Off Tariff plan. The live auction allowed the customer to secure a final discount of 28% off the regulated tariff, which was higher than the 25% rate it had with its incumbent retailer.
“Most businesses prefer Fixed Price Plans as there is certainty in their electricity spending which is helpful for budgeting purposes. They usually compare 12- and 24-month contracts, and decide based on the prevailing fixed rates. In the current market situation, 24-month fixed rates are lower for businesses,” Tan said.
Most of the time, the electricity procurement process is still very manual and time-consuming – the businesses contact electricity retailers individually for quotes, and then try to make sense of the various electricity packages which often come with detailed and complex terms and conditions.
PowerSelect condenses the procurement processes in its platform by housing data from the wholesale and futures electricity markets, having an in-house team assist businesses in understanding and navigating the contract terms and conditions of the different electricity retailers and advise them in areas like the reserve price (or starting bid) for the auctions as well as the contract durations.
For the future, EMC is looking to expand the PowerSelect platform as it has observed that businesses are increasingly looking for other energy-related products and services. “Whilst there were plans to roll out additional, value-added services on PowerSelect at later stages, we intend to bring forward our plans to better support our customers. We are in the process of evaluating our options for PowerSelect,” Tan said.
With the consolidation of Singapore’s retail market, the EMC is also expecting more differentiated packages from the remaining retailers like green electricity packages as they gain more experience with the OEM, and as consumers’ awareness level and expectations increase over time.