常年都是夏，一雨便成秋

(Translation: Summer throughout the year, turning to autumn when it rains)
- Chinese saying that describes Singapore’s weather conditions

Introduction

Situated near the equator, Singapore has a typical tropical climate. Singapore has been described to have a perpetual summer, save during instances of heavy rainfall such as the monsoon seasons. Being a small country with a lack of land for large scale renewable projects, coupled with the commitment to mitigating climate change, it is little wonder that under the Singapore Green Plan 2030, one of the key programmes is for Singapore to quadruple solar energy deployment by 2030 (See link).

It is not surprising that Singapore is looking to ramp up on solar energy deployment. As a small country with little land and a lack of natural resources, other renewable energy options are not as viable. The National Climate Change Secretariat, established in July 2020, has identified solar energy as the most promising source of renewable energy for Singapore (See link). Singapore is counting on its high average solar irradiation of about 1,580 kWh/m², to meet the targets it has set (See link), but at the same time, faces a variety of issues including intermittency and energy storage, which the country hopes to alleviate through research and development.

Already, multiple rooftop solar projects have been developed in Singapore, from commercial buildings (such as 313 Somerset Central) to residential Housing & Development Board (HDB) apartment blocks in the heartlands (such as the HDB apartments at Serangoon North Precinct).

Installation of solar photovoltaic systems

Installation of solar photovoltaic systems will need to comply with regulatory requirements. A qualified person such as a registered architect or a professional engineer will be engaged to ensure that the installation is done smoothly, and that the necessary approvals and licences are obtained. Potentially, approval may be required from the Building and Construction Authority, the Urban Redevelopment Authority, the Singapore Civil Defence Force and/or the Civil Aviation Authority of Singapore, depending on various factors related to the where and how the facility will be installed.

For the commissioning, a licensed electrical worker should be engaged to commission the facility, including to handle the electrical connection and application for electrical licences. Potentially, a generation licence may be required.

Rooftop solar power purchase agreements

In most instances, the customer and the developer of the rooftop solar energy facility will enter into a power purchase agreement (PPA), under which, the customer will purchase electricity at a pre-determined tariff from the developer for a fixed term.

During the term, ownership of the solar energy facility will vest in the developer. At the expiry of the term, ownership of the solar energy facility may be transferred to the customer at no cost, or the developer may remove the solar energy facility and reinstate the customer’s site.

Any incentives, rebates and benefits derived from the solar energy facility will usually be for the benefit of the developer, although benefits such as environmental attributes (including renewable energy credits) may be negotiated to be allocated to the customer.

Examples of key obligations of the developer under a typical PPA will include the following:

• completion of the design, engineering, construction and installation of the facility within a certain period of time;
• operation, repair and maintenance of the facility
• installation of metering systems;
• procurement of permits and insurances; and
• guaranteeing a minimum energy output yearly.

Examples of key obligations of the customer under a typical PPA will include the following:

• provision of access and security to the site and facility and temporary storage space, and ensuring that the site is in a state that is ready for the developer to conduct the installation;
• maintenance of the site and property;
• purchase of electricity generated by the facility and payment of agreed tariff;
• procurement of certain insurances; and
• necessary cooperation with the developer.

Some overarching considerations

One of the developer’s key considerations is its recovery of its capital and operating expenditures relating to the solar energy facility under the PPA.

Therefore, if the PPA is terminated before the expiry of the term (especially where not due to the developer’s own breach), the PPA will typically require the customer to:

1.  in the case where the solar energy facility is not yet operational, compensate the developer for costs incurred by the developer and liabilities the developer will incur as a result of the early termination; and
2. in the case where the solar energy facility has become operational, compensate the developer for the value of the solar energy facility based on a pre-agreed compensation schedule which takes into account year-on-year depreciation. Often, the developer will transfer the solar energy facility to the customer once the compensation has been paid by the customer.

In addition, if the solar energy facility is not able to generate electricity due to reasons attributable to the customer, the developer will require the term of the PPA to be extended in order to have an adequate period of time to recover its capital and operating expenditures.

On the other hand, one of the customer’s key considerations is the availability of a minimum guaranteed electricity output from the solar energy facility that can be purchased by the customer at a lower-than-market pre-agreed price.

Therefore, the PPA will typically require the developer to compensate the customer for lower than guaranteed electricity output (unless caused by force majeure or the customer) in the form of liquidated damages. The liquidated damages will usually be calculated to compensate the customer for the additional costs required to be incurred by the customer to purchase electricity from third parties due to the lower than guaranteed electricity output of the solar energy facility.

Some unique features

Due to the nature of rooftop solar projects, there are some unique features in a rooftop solar PPA that are less often seen in utility-scale solar PPAs.

First, the customer under a rooftop solar PPA is often a lessee of the property where the solar energy facility is installed on. Therefore, the term of the PPA will often be structured to keep within the term of the customer’s lease of the property. In addition, the PPA will have to address the issue of the expiration of the customer’s lease of the property, and what happens where the term of the property lease expires before the term of the PPA.

Second, a typical rooftop solar energy facility is often of a relatively small scale. Therefore, relocation of the solar energy facility may actually be feasible. Therefore, a rooftop solar PPA may sometimes entitle the customer to request for a relocation of the solar energy facility to a mutually agreed location, usually at the customer’s cost. This right to relocate may be useful where the original location of the solar energy facility is not or will not be available before the expiration of the term of the PPA.

Third, a typical rooftop solar energy facility built on the customer’s premises generates electricity primarily for the customer’s consumption. However, where a rooftop solar PPA does not require the customer to purchase all the electricity generated by the solar energy facility, the developer will be entitled to sell any excess electricity not consumed by the customer to third parties.

No feed-in-tariffs in Singapore

At the moment, the Singapore government has to yet to adopt subsidies such as feed-in-tariffs. The reason for the reluctance appears to stem from an unwillingness to distort the market and to avoid increasing costs for consumers. As such, the Singapore government would prefer to let the free market run its course, such that the correct price signals are sent to consumers and investors (See link).

Sale-back of excess electricity

A consumer may sell excess solar-generated electricity to the grid. There are generally three schemes for this:

1. Non-contestable consumers with embedded solar capacity of less than 1 Mega-Watt, Alternating Current (MWac) may register with SP Services to sell their excess electricity under the Simplified Credit Treatment Scheme;
2. Contestable consumers with embedded solar capacity of less than 10 MWac may register with SP Services to sell their excess electricity under the Enhanced Central Intermediary Scheme; or
3. Non-contestable consumers and contestable consumers with embedded solar capacity of more than or equal to 1 MWac may register directly with the Energy Market Authority as a Market Participant to sell their excess electricity as a Market Participant.

Information on each of the schemes can be found on the Energy Market Authority’s website (See link).

Possible future developments in Singapore

As Singapore looks to cut down on emissions and ramp up on renewable energy development, it is anticipated that other renewable energy sources will be considered other than solar energy. Already, the Energy Market Authority of Singapore has announced that it will conduct exploratory studies on the possibility of harnessing geothermal energy and if such studies yield possible results, further research is likely to be conducted (See link). Studies were also previously conducted on nuclear energy, but were determined to not be suitable at present for deployment in Singapore (See link). The renewable energy industry in Singapore appears to have exciting prospects in the near future, and a greener, more sustainable Singapore is surely within reach.