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  Business Times 20 Apr 07
S'pore moving to develop solar power know-how
 EDB harnessing resources in its four-pronged approach
By Matthew Phan in Freiburg, Germany

WHEN Singapore wants to get something done, it usually does it well. The biomedical industry got a kick-start, and local water firms and government bodies are now leaders in the field.

But solar energy, the Economic Development Board's latest baby, may prove a little tricky.

As Tony Tan, chairman of the National Research Foundation, remarked on Tuesday after a visit to the Energy Research Centre of the Netherlands: In water, Singapore can truly claim to be a world leader, but with solar power, the republic is far behind.

Solar is a cornerstone of the EDB's drive to develop Singapore as a centre for clean energy. The aim was made clear last month with the announcement that the EDB would put in $350 million over the next five years.

'We want to have an ecosystem with a variety of companies providing all kinds of products and solutions. Then we can deal with almost any market in Asia,' said Kenneth Tan, executive director of EDB's new business group.

The EDB's approach has four aspects. The first is to develop adequate manpower, which industry players like Germany's SolarWorld say is a key requirement to setting up operations overseas.

Second, to develop research centres as with the water industry. The University of New South Wales, a leading research institute with respect to solar energy, already has a local presence.

Familiar so far? Yet solar is different from water in that the PUB does not drive demand.

Instead, the EDB hopes for broad market adoption, although this is hindered by a lack of public acceptance, and high cost. Thus, the plan will encourage test-bedding of solar modules and other clean energy products at iconic buildings in Singapore. EDB will announce details in coming months.

Finally, it could adjust Singapore's regulations to allow distributed generation, in other words, to allow users of solar cells to feed excess energy back to the grid and compensate them for doing so, as is the case in Germany, Japan and some US states.

Singapore is likely to allow feed-in at market prices - up from zero at present - but industry players say Singapore's efforts may not be enough unless it introduces additional subsidies to stimulate demand, like in Germany.

The German government pays users of solar energy a feed-in incentive of 0.47 euros for every kilowatt hour of electricity they feed to the grid, guaranteed for 20 years.

This means that investment in solar panels can generate profit, and has spurred the German market to such an extent that it now accounts for 45 per cent of world demand for solar energy, according to Peter Woditsch, a senior executive at integrated solar cell manufacturer SolarWorld.

The US does not subsidise solar power, but imposes a tariff on grid electricity that raises grid prices in the daytime. This makes solar cost-competitive at certain times of day, said Mr Woditsch. The US accounts for 13 per cent of world demand, and he anticipates the fastest growth there.

'But government-directed test-bedding is not enough to create a sustainable market,' said Christophe Inglin, chair of the Renewable Energy Committee at the Sustainable Energy Association of Singapore. Without a broad-based market, we will not develop the local systems integration expertise, and we will get too little data on system performance.

'What's missing is the customer-end of the equation. Without it, you don't get the right stimulation for product customisation.'' Mr Tan of the EDB thinks Singapore would not have to use heavy subsidies to achieve this.

'Germany was facing much higher prices in solar energy production when it started its incentive scheme many years back, but technology has reached a stage where prices are closer to grid retail prices. Now it's a matter of allowing people with solar panels to feed electricity to the grid and we are working on this with the Energy Market Authority,' he said.

Singapore's policy does not currently allow such subsidies; in contrast, feed-in subsidies cost Germany one billion euros (S$2 billion) a year, according to Mr Woditsch.

As CEO of Deutsche Solar, a SolarWorld subsidiary, he believes the main obstacle is lack of skilled manpower. SolarWorld has a distribution centre in Singapore but does not have any manufacturing operations in the country.

SolarWorld's footprint could change soon - its founder and principal shareholder Frank Asbeck will visit Singapore on April 27 to receive an International Headquarters award, when he is due to speak with Minister for Trade and Industry Lim Hng Kiang.

Singapore has a good chance to develop a solar industry because it already has expertise in related fields of semiconductor manufacture, chemicals and process engineering, said Mr Tan. Semicon engineers know how to work with silicon, the basic raw material in solar cell manufacture, and even Deutsche Solar's present chief technology officer was recruited a year ago from Samsung, an electronics firm, he said.

Further, the equipment and facilities needed for both industries are not dissimilar, for example, clean rooms are also used in making solar cells. The EDB's plan will add necessary ingredients for market-led growth, he said.
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