Singapore's Commitment to Green Energy
As part of Singapore's Green Plan 2030 and broader climate commitments, the government has implemented a comprehensive suite of incentives to accelerate the adoption of renewable energy. These incentives are designed to overcome the initial cost barriers and make renewable energy systems more financially accessible for both businesses and homeowners.
This guide outlines the key incentive programs available as of July 2023, along with eligibility criteria and application processes. While we strive to maintain accuracy, we recommend consulting the respective government agencies for the most current information before making investment decisions.
Incentives for Commercial and Industrial Properties
1. Energy Efficiency Fund (E2F)
Administered by the National Environment Agency (NEA), the E2F provides grants to help businesses improve energy efficiency, including through renewable energy adoption.
Key Features:
- Grant Support: Up to 50% of qualifying costs for energy efficiency assessments, energy management information systems, and resource-efficient building design.
- Eligibility: Companies registered and operating in Singapore.
- Application Process: Submit applications through the NEA's website with project proposals and supporting documentation.
2. Resource Efficiency Grant for Energy (REG(E))
This grant by the Economic Development Board (EDB) supports manufacturing companies in reducing energy consumption, carbon emissions, and other resource consumption.
Key Features:
- Grant Support: Up to 50% of qualifying costs for energy efficiency projects, including renewable energy systems that reduce grid electricity consumption.
- Eligibility: Manufacturing facilities with significant energy consumption.
- Minimum Project Size: Projects must have a minimum qualifying cost of S$100,000.
3. Green Mark Incentive Scheme for Existing Buildings (GMIS-EB)
This Building and Construction Authority (BCA) scheme supports existing building owners in undertaking energy efficiency improvements, including renewable energy installations.
Key Features:
- Cash Incentive: Up to S$20 per square meter of Gross Floor Area (GFA) for buildings achieving Green Mark Gold and above ratings.
- Co-Funding: Up to 50% of the retrofitting cost, with varying caps based on the building's Green Mark rating.
- Renewable Energy Component: Solar and other renewable installations that contribute to improved building energy efficiency are eligible.
Incentives for Residential Properties
1. HDB's Solar Nova Program
The Housing Development Board's (HDB) SolarNova program facilitates solar PV installations on HDB rooftops, with benefits passed on to residents.
Key Features:
- Benefit Mechanism: Electricity generated is first used to power common services (lifts, lighting, water pumps), reducing maintenance fees for residents.
- Eligibility: No direct application process for residents as installations are planned by HDB for suitable blocks.
- Current Scope: The program aims to deploy 540 MWp of solar energy across 10,000 HDB blocks by 2030.
2. Enhanced Central Provident Fund (CPF) Housing Grant
While not specifically for renewable energy, eco-friendly HDB flats with solar installations may qualify for higher grant amounts.
Key Features:
- Grant Amount: First-time applicants can receive up to S$80,000 for purchasing resale flats.
- Green Premium: Properties with eco-friendly features, including renewable energy systems, may command higher valuations, indirectly benefiting from these grants.
3. Private Residential Solar Installations
For private residential property owners, the main incentive comes through the simplified grid connection process and solar export arrangements.
Key Features:
- Simplified Grid Connection: SP Group has streamlined the application process for connecting residential solar systems to the grid.
- Solar Export Tariffs: Excess electricity can be sold back to the grid at prevailing market rates through various retailers.
- Installation Process: No permit is required for installations under 1.5 kW for single-phase or 3 kW for three-phase supplies.
Tax Incentives
1. Investment Allowance (IA) Scheme
Administered by the Economic Development Board (EDB), this scheme provides tax incentives for companies investing in energy efficiency projects, including renewable energy.
Key Features:
- Tax Deduction: Additional 30% to 100% tax allowance on qualifying equipment costs.
- Eligibility: Companies registered in Singapore with substantial energy consumption.
- Minimum Investment: Typically requires a significant capital expenditure, with exact thresholds varying by sector.
2. Accelerated Depreciation Allowance
Under Section 19A of the Income Tax Act, companies can claim accelerated capital allowances for energy efficiency equipment, including renewable energy systems.
Key Features:
- Depreciation Period: Equipment cost can be written off over 3 years instead of the standard longer period.
- Eligibility: Businesses purchasing qualifying energy-efficient equipment, including solar panels and wind energy systems.
Financing Programs
1. Green Loan Schemes
Several local banks offer preferential loan terms for renewable energy and sustainability projects.
Key Features:
- Interest Rates: Generally 0.5% to 1% lower than standard commercial loan rates.
- Loan Tenure: Extended repayment periods of up to 10 years, compared to 5-7 years for conventional loans.
- Participating Banks: DBS, OCBC, and UOB offer specific green financing programs.
2. Enterprise Financing Scheme - Green (EFS-Green)
Enterprise Singapore's financing scheme specifically supports SMEs in adopting green technologies, including renewable energy.
Key Features:
- Government Risk-Share: Up to 70% risk-share with participating financial institutions.
- Maximum Loan: Up to S$50 million per borrower group.
- Eligibility: Singapore-registered companies with at least 30% local equity and group annual sales of S$500 million or less.
Carbon Credits and Carbon Tax Considerations
1. Carbon Tax Offset
Singapore implemented a carbon tax in 2019, currently set at S$5 per tonne of greenhouse gas emissions. This is scheduled to increase to S$25 per tonne by 2024 and S$50-80 per tonne by 2030.
Key Implications:
- Cost Avoidance: By adopting renewable energy, companies can reduce their carbon emissions and associated tax liabilities.
- Financial Benefit: As the carbon tax increases, the financial case for renewable energy becomes stronger.
2. Carbon Credits Market
Singapore is developing a carbon credit trading framework, which may provide additional revenue streams for renewable energy projects.
Key Developments:
- Climate Impact X (CIX): A Singapore-based global carbon exchange and marketplace established by DBS, SGX, Standard Chartered, and Temasek.
- Potential Benefits: Renewable energy projects may generate tradable carbon credits, providing additional financial returns beyond energy savings.
Case Study: Commercial Building Solar Installation
A 2022 solar PV installation on a commercial building in Tanjong Pagar demonstrates how these incentives can work together:
- System Size: 120 kWp rooftop installation
- Total Investment: S$240,000
- GMIS-EB Grant: S$50,000 (approximately 21% of project cost)
- Tax Benefits: Accelerated depreciation over 3 years
- Annual Electricity Savings: S$36,000
- Carbon Tax Savings: Currently minimal but increasing with future tax raises
- Payback Period: Reduced from 6.7 years to 5.3 years with incentives
How to Apply for Incentives
General Application Process
- Identify relevant incentives based on your property type and project scale
- Engage with qualified renewable energy vendors (like Impavaviat) to develop detailed project plans
- Prepare financial projections including incentive benefits
- Submit applications to relevant government agencies, often requiring energy assessments
- Implement the project after approval
- Submit verification documentation for final incentive disbursement
Common Documentation Requirements
- Detailed project proposals with technical specifications
- Energy audit reports or consumption data
- Cost-benefit analysis
- Vendor quotations and credentials
- Business registration information
- Historical energy consumption data
Future Developments
Singapore's incentive landscape for renewable energy continues to evolve. Based on recent policy signals, we anticipate:
- Increased carbon tax rates driving stronger financial justification for renewable energy
- Enhanced support for energy storage systems complementing renewable installations
- New incentives for innovative technologies such as building-integrated photovoltaics
- Expanded support for community and virtual power plant arrangements
- Additional financing mechanisms targeting medium-sized installations
Conclusion
Singapore offers a robust framework of incentives that significantly improve the financial viability of renewable energy projects. By strategically combining grants, tax benefits, and financing options, businesses and homeowners can substantially reduce the payback period for their renewable energy investments.
At Impavaviat, we specialize in helping our clients navigate these incentive programs, ensuring maximum financial benefit while simplifying the application process. Our holistic approach includes not just system design and installation, but comprehensive incentive application support throughout your renewable energy journey.
