Singapore’s 600MW threshold favours large utilities

The minimum capacity and S$100m performance bond raise the entry barrier.

Singapore’s next hydrogen-ready power tender is likely to favour established utilities as its scale, financing requirements and project risks raise the barrier for new entrants.

Each proposed generation unit for 2032 must deliver at least 600MW, whilst shortlisted developers are required to provide a S$100m performance bond and use existing land.

Dr. Victor Nian of CSER said projects of that size require developers with substantial financial and operational capacity.

Developers would need strong balance sheets, generation experience, access to gas and grid infrastructure, as well as the ability to absorb significant construction risk.

“Incumbent generators will have a natural advantage in that sense,” he said. “I mean, a new entrant could still participate in principle, but realistically, I think you will probably need a very strong consortium rather than just any individual contender to play in the Singapore market.”

The tender also requires plants to be hydrogen-ready, but Nian said the investment case must initially remain viable using natural gas.

“The investment case has to work on natural gas first,” he said. “We talk about hydrogen, but without assuming that cheap hydrogen will suddenly become available, gas will remain relevant.”

Hydrogen readiness should instead provide an option to decarbonise the plants later as Singapore continues to require firm generation capacity for growing electricity demand.

Nian said complying with the initial hydrogen-readiness requirement is unlikely to be the largest cost. Greater expenses would emerge from sourcing, transporting and storing green or low-carbon hydrogen and modifying plants for higher hydrogen blends.

“So even if hydrogen gets delayed, I still think the readiness is a relatively inexpensive insurance,” he said.

Investor appetite remains difficult to gauge because the number of bids received in earlier rounds has not been disclosed.

Nian said the 2032 tender should provide a clearer indication of how many developers are prepared to commit capital under the stricter scale and financing requirements.