To achieve the goals of the Johor-Singapore Special Economic Zone (JS-SEZ), Singapore and Malaysia agree to cooperate in several areas, such as facilitating the development of renewable energy projects to accelerate renewable energy trading.
This builds on years-long momentum. In October 2023, Malaysia approved the Cross-Border Electricity Sales for Renewable Energy scheme to enable cross-border sales of renewable energy through an energy exchange to neighbouring countries.
In June 2024, Malaysia held its inaugural auction for the sale of green electricity from Malaysia to Singapore via the Energy Exchange Malaysia (ENEGEM) platform. To date, almost 28,000 megawatt-hours (MWh) of electricity have been traded under this pilot project.
In September 2024, the capacity of electricity traded under the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMSPIP) was doubled to 200 megawatts (MW) in its second phase, and the inaugural flow from Malaysia to Singapore commenced that month. To date, almost 8,000MWh of electricity has been traded under Phase 2.
On Dec 9, 2024, Sembcorp Industries ’ wholly-owned subsidiary, Sembcorp Power, signed a supply agreement to import 50MW of renewable electricity from Malaysia’s Tenaga Nasional Berhad (TNB) for two years. Flow into Singapore started on Dec 13, 2024.
To enable longer-term and large-scale bilateral and regional power trade, SP Group and TNB are undertaking a joint feasibility study to expand interconnector capacity and infrastructure between Singapore and Malaysia.
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Of the nine zones covered under the JS-SEZ, four regions — Tanjung Pelepas, Pasir Gudang, Sedenak, and Pengerang Integrated Petroleum Complex (PIPC) — have been earmarked for energy infrastructure development.
Sembcorp Industries and Seatrium are among a handful of stocks that will benefit from the JS-SEZ, according to DBS Group Research. “We believe JS-SEZ can bring about benefits to oil and gas and clean energy value chain players, including Seatrium for ship repair and carbon capture, utilisation and storage; and Sembcorp Industries for renewable energy capacity.”
PIPC was launched in 2012 to become a regional oil storage and trading hub. However, according to DBS, progress has fallen behind expectations, and besides Saudi Aramco, it has had little success in attracting foreign investment.
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Analysts at DBS say a joint development there might be the answer. “The vast land could serve as a hinterland for the expansion of oil and gas companies from Singapore and potential revival of renewable solar energy farm projects,” attracting foreign investment. Other possible projects include carbon capture solutions and clean energy value chains, such as hydrogen, adds DBS.
Also, the ENEGEM project is the first power import project in Singapore where renewable power is coupled with Renewable Energy Certificates (RECs). RECs represent the environmental attributes of generating 1MWh of energy from renewable sources.
Singapore and Malaysia will jointly study pathways towards a credible framework to recognise RECs associated with cross-border electricity trade. According to Singapore, the development of a “credible” cross-border REC framework is expected to “catalyse” demand for cross-border electricity trading projects, which will, in turn, drive investment to support the long-term viability of renewable energy projects in the region.
The two countries also exchanged MOUs to cooperate on carbon credits and cross-border carbon capture and storage (CCS). Under the former MOU, Singapore and Malaysia will work towards a legally binding agreement that establishes a bilateral framework to transfer carbon credits aligned with Article 6 of the Paris Agreement.
According to Singapore’s Ministry of Trade and Industry, this implementation agreement will enable the development of carbon credit projects that “unlock additional mitigation potential, promote sustainable development and deliver benefits to local communities”.
The latter MOU sets the stage for both countries to engage in bilateral discussions to enable cross-border CCS and discuss components of a legally binding agreement.
CCS is the process of capturing, transporting and permanently storing carbon dioxide, thereby avoiding releasing emissions into the atmosphere.
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HSBC Global Research says these cooperative agreements on energy transition should further strengthen the region’s artificial intelligence and data centre offerings. “All these should drive the growth of data centre developers and utility/infrastructure companies.”
Tan Wooi Leong, senior executive director of global energy at Surbana Jurong, says mutual cooperation in electricity trading and renewable energy potentially opens another renewable energy source for Singapore, in addition to existing projects from Indonesia, Vietnam, Laos and Australia.
He adds that clean energy companies and the entire clean energy ecosystem on both sides of the causeway will benefit from these opportunities. These companies include energy developers, original equipment manufacturers, consultancy and professional services firms, and construction firms.
Singapore and Malaysia can continue to leverage the “existing but limited” transboundary power transmission network, says Tan. “With a larger renewable energy generation pool in Malaysia, cross-border electrons trade will increase, and there will be stronger demand to enhance the interconnection through new capacity expansion and hence improve and advance the LTMS-PIP proposition.”
