Introduction

Singapore’s energy and infrastructure sector is undergoing significant transformation, driven by a transition to renewable energy, accelerating technological adoption and evolving geopolitical dynamics. Amidst this change, Singapore has held its position as a key strategic hub for energy and infrastructure in Asia-Pacific by maintaining a stable regulatory environment and embracing global trends through robust policy support. As a key hub for energy trading, Singapore also plays a pivotal role in shaping regional energy markets, with emerging trends reflecting both opportunities and challenges.

Rise of Renewable Energy and Energy Transition

Singapore has committed to achieving net zero greenhouse gas emissions by 2050. This transition to renewable energy has become a central driver of trends in the energy and infrastructure sector. The share of renewables in Singapore’s power generation mix reached a record high of 2.58% in May 2025 due to Singapore ramping up renewable imports and accelerating local solar power generation. As Singapore has limited renewable energy potential, it expects to meet 6 gigawatts, or around one-third of its power demand, using clean electricity imports by 2035.

Singapore’s energy transition is supported by legislative reform. Singapore’s energy market has been governed by several sets of legislation including the Electricity Act 2001, Gas Act 2001 and related regulations. The Electricity Act and Gas Act collectively create a competitive market framework for the electricity and gas industries. The Electricity Act regulates the generation, transmission, supply and use of electricity and the Gas Act regulates the transportation and retail sale of gas. To strengthen Singapore’s ability to plan for and develop a decarbonised, secure and cost-competitive energy system, the Energy Transition Measures and Other Amendments Act 2024 progressively came into effect from late 2024 to September 2025. Notably, the Act established the Future Energy Fund which provides catalytic funding to improve the commercial viability of strategic clean energy projects, as these projects may involve high upfront costs and significant risks. The Future Energy Fund was established with an initial SGD5 billion and a further SGD5 billion committed towards the fund in February 2025. Other parts of the Act amend the Electricity Act and Gas Act to empower Singapore’s Energy Market Authority (EMA) to direct owners or occupiers of critical energy infrastructure to allow licensees access to their infrastructure, regulate the power sector and safeguard energy security.

Apart from the Future Energy Fund, Singapore has also been sourcing funds on the international platform. In September 2025, the Monetary Authority of Singapore announced that the Green Investments Partnership, a blended finance partnership under Singapore’s Financing Asia’s Transition Partnership initiative, had achieved its first close with USD510 million of committed capital from institutions across Australia, the Netherlands, Singapore, the UK and more. The capital will be deployed into green and sustainable infrastructure opportunities in Southeast and South Asia across a series of transactions.

To attract additional financing into Singapore, in April 2025, government-linked company Singapore Energy Interconnections (SGEI) was established to invest in, develop, own and operate interconnectors to import electricity. SGEI will also work closely with regional partners to develop renewable energy projects and promote best practices within the power sector. The establishment of SGEI aims to counteract the reluctance among financial institutions to fund grid infrastructure for the transport of electricity arising from perceived high risks and large upfront costs. This could help to increase investor confidence, attract new funding and serve as a catalyst for future M&A deals related to the import of clean energy.

The transition to renewable energy has also spurred strategic alliances between countries. For example, the Laos PDR-Thailand-Malaysia-Singapore Power Integration Project was enhanced in 2024 to double the capacity of hydropower-sourced electricity traded between the countries to 200 megawatts (MW). In May 2025, it was announced that state-owned companies across Malaysia, Vietnam and Singapore would collaborate to explore the export of renewable energy from Vietnam to Malaysia and through Malaysia to Singapore.

Apart from collaborations at a national level, the energy transition has also directed buyers of energy, including data centre operators, to source renewable energy through the purchase of renewable energy or acquisition of renewable energy infrastructure. Notably, in April 2024, subsidiaries of US-based data centre firm Equinix inked two long-term power purchase deals with a wholly owned subsidiary of Sembcorp Industries, a leading renewables player in Asia. In a tie-in with policy moves, Sembcorp will be off-taking from the Singapore government’s planned installation of solar panels across approximately 1,400 housing blocks and government sites to supply Equinix with up to 75 MW-peak of renewable energy and 30 MW from its power generation portfolio. This highlights the importance of policy support in strengthening the country’s energy and infrastructure sector. As an example of the acquisition of infrastructure, Sembcorp Industries announced in October 2025 that it had agreed to acquire ReNew Sun Bright Private Limited, which owns and operates a 300 MW solar power asset located in Rajasthan, India.

To support Singapore’s net zero target, the EMA is also gradually tightening emissions standards. In October 2023, the EMA established a two-tier emissions standard for new and repowered fossil fuel-fired generation units. These standards required regularly used generation units to be around 10% more carbon-efficient than then-existing generation units in Singapore. The EMA is proposing an Emissions Standard Code to enforce the emissions standards and rules regarding power generators’ emissions monitoring, reporting, validation and hydrogen readiness. For example, under the proposed Emissions Standard Code, certain power generators will be required to demonstrate that their generation unit has the technical capability to be at least 30% hydrogen-ready by volume.

Renewable energy goals have been a major demand driver across the wide range of asset acquisitions and portfolio expansions that we have advised on, and we expect this trend to continue in step with the broader energy transition. This has been, and will continue to be, bolstered by a growing use of green financing which signals to investors the importance of environmental performance in asset valuation and risk assessment.

Increasing Adoption of Artificial Intelligence and Technology

The increasing adoption of artificial intelligence (AI) and technology is accelerating investment and M&A activity in data centres and digital infrastructure both domestically and internationally, as Singapore moves to build and secure AI-ready capacity. Major players like Singtel, a Singaporean telecommunications conglomerate, and Keppel, a global asset manager and operator, have entered into acquisitions for data centres abroad and in Singapore, whether singly or together with major players in other jurisdictions.

Signalling a clear policy direction towards sustainable digital infrastructure, in May 2024, Singapore announced its plans to expand data centre capacity by more than one-third, with at least 300 MW of data centre capacity to be added in the next few years and another 200 MW to be allocated only for operators using renewable energy. To encourage the use of renewable energy, operators can tap into incentives offered by Singapore’s Economic Development Board and other government agencies to defray operating costs. We expect this to incentivise innovation and investment in energy efficiency, carbon management and advanced cooling technologies. This approach underscores Singapore’s dual focus on maintaining its position as a regional digital hub while ensuring that future expansion occurs within its broader sustainability agenda.

Policy measures are also expected to tie in with the growing use of green financing to steer investments towards sustainable infrastructure to further support the use of renewable energy in data centres. For example, in February 2025, Singtel announced that it had secured a SGD643 million green loan from a syndicate of major banks in Singapore to develop a new 58 MW data centre in Singapore.

These developments are likely to accelerate the establishment of data centres designed to operate using renewable energy in Singapore. These have made attractive targets for many of our clients that prefer to acquire developed assets rather than undertake greenfield development, and we expect increasing activity in this area. Infrastructure funds and REITs seeking exposure to sustainable digital infrastructure are likely to participate in such transactions. Already, REITs in Singapore increasingly incorporate data centres into their portfolios. For example, data centres made up 54.8% of Mapletree Industrial Trust’s assets under management as at 30 June 2025, a significant increase from 2010, when data centres were not reported to comprise any of the REIT’s portfolio. REITs concentrated on data centres, such as Singapore’s Keppel DC REIT, which was the first data centre REIT listed in Asia, are also likely to become more common.

Success in achieving both its plans to expand data centre capacity and climate goals could see Singapore emerge as a centre for M&A activity in energy-efficient and sustainable digital infrastructure.

Role of Trading Desks in the Energy and Infrastructure Sector

Singapore plays a growing role in global energy markets as a major energy trading hub. In particular, as the home to major trading desks of Shell, BP, Vitol and Trafigura, Singapore is a leading trading hub for oil and liquefied natural gas (LNG).

The performance of trading desks influences energy and infrastructure M&A and strategic alliances. In advising on these transactions, we typically see buyers of energy plants or portfolios evaluate trading capabilities as part of valuation, and energy companies acquiring new assets often seek to integrate them into their trading book to optimise margins. A strong trading desk can boost and stabilise the cash flow for an energy asset by locking in favourable prices through hedging strategies and capturing green premiums through, for example, the selling of renewable energy certificates (RECs). Meanwhile, when an asset can be integrated with the buyer’s existing trading book, the buyer can aggregate the generation of energy from that asset with other sources, sell bundled energy to customers and hedge the whole book centrally. For example, Shell’s acquisition of global LNG trading company Pavilion Energy (including Pavilion Energy’s portfolio of LNG offtake and supply contracts, regasification capacity, and LNG bunkering business) in April 2025 strengthened Shell’s position in the LNG market by growing sales by a reported 4-5% per year through 2030.

Expanding LNG Sector

LNG is a top alternative to traditional sources of energy as it is readily available, affordable and cleaner than most other fossil fuels. Amongst clients who are still relying on traditional energy sources such as diesel, we have seen increasing interest in diversifying their energy sources to include LNG. Most significantly, LNG bunker sales have surged in the maritime sector. Singapore has seen substantial increases in LNG bunker sales and emerged as the leading LNG bunkering port (as a single port) globally in 2024 with more than 450,000 tonnes of LNG supplied. This was nearly four times the volume supplied in 2023. Apart from the maritime sector, LNG is gaining traction as an energy source for industries requiring both power and cooling, such as food, pharmaceuticals and data centres.

Singapore currently has one onshore LNG terminal. To support the growing demand for LNG, a second, offshore LNG terminal at Singapore’s Jurong Port, featuring a floating storage and regasification unit, is being built. This new terminal is expected to be completed by this decade and will have five million tonnes per annum of throughput capacity. This will grow Singapore’s LNG import capacity by 50% to a total of 15 million tonnes per annum, which will significantly raise Singapore’s ability to respond to demand spikes and supply disruptions.

Singapore is also building a new LNG truck loading facility to allow LNG supplies to reach industrial users that are not directly connected to its town gas network. This new facility is expected to be completed by the end of 2026. We expect the new LNG terminal and truck loading facility to be further supported by the development of more small-scale infrastructure such as bunkering vessels and digital platforms. As LNG bunkering demand in Singapore is anticipated to exceed two to three million tonnes per annum by 2034, Singapore has also been studying the need for additional LNG bunkering infrastructure to meet this increase in demand.

The above will further cement Singapore’s position as a leading trading hub for LNG. This is likely to attract investments from foreign investors seeking exposure to the LNG market in Asia-Pacific. Additionally, as Singapore expands its LNG capabilities, we expect to see more joint ventures and collaborations between companies in the energy, industrial, maritime and transport sectors for LNG projects. We also expect companies seeking to enhance their energy facilities to participate in bolt-on acquisitions for assets such as LNG storage facilities.

Geopolitical Impact on the Energy Sector

The energy sector in Singapore is deeply influenced by geopolitical factors, given the region’s strategic location and dependence on global energy supply chains. Singapore imports nearly all its energy as it has no domestic oil, gas or coal reserves. Trade tensions, regional conflicts, and shifting alliances impact commodity prices, supply security, and regulatory landscapes.

Recent geopolitical developments have underscored the importance of supply chain resilience and diversification. For example, in response to Russia’s invasion of Ukraine, the USA, UK and EU, amongst other countries, have imposed sanctions and controls on energy imports from Russia such as price caps on the sale of Russian oil, blanket bans on certain types of energy imports from Russia, and sanctions against vessels shipping Russian oil. Trade restrictions show no sign of easing as the war continues. This has pushed buyers to turn to alternative sources of oil such as Africa, the Middle East, and the USA.

Singapore’s energy players are increasingly adopting risk mitigation strategies, including diversified sourcing and closer engagement with regional partners. Singapore companies have entered into arrangements and transactions with partners in countries including Cambodia, Vietnam and India to explore the import of renewable energy from various countries in the ASEAN region. Singapore’s ability to collaborate with its counterparts in the region reinforces its status as a neutral, trusted trading hub and partner where energy flows can be efficiently managed amidst global uncertainty.

Guided by Singapore’s strong compliance and regulatory culture, due diligence processes are also being revised to mitigate exposure to sanctioned jurisdictions. In M&A transactions, sanctions have necessitated enhanced due diligence on targets with exposure to sanctioned jurisdictions. Such exposure may cause valuations to be marked down due to anticipated restrictions on monetisation or resale, or additional compliance costs anticipated.

The volatile geopolitical environment has also invited enhanced regulatory oversight of energy and infrastructure transactions. In response to challenges such as military conflicts that have disrupted energy supplies, a new Significant Investments Review Act 2024, which came into force in March 2024, requires entities deemed critical to Singapore’s national security interests, including energy companies such as Shell and Sembcorp, to notify or seek approval from the authorities for ownership and control changes, as well as for the appointment of key positions such as the chief executive officer, directors and chairperson of the board. Increased regulatory oversight may deter companies from participating in transactions with foreign government-linked counterparts and lengthen the timeline or complicate the process for M&A transactions involving regulated entities.

We have been advising an increasing number of clients on sanctions-related issues, with many introducing additional compliance checklists and approval layers as part of their internal review processes. Our international offices bring extensive expertise in advising on the implications of sanctions and other regulatory measures, as well as on the broader commercial and contractual impacts arising from geopolitical events including matters involving force majeure, frustration, and related risk management strategies.

Carbon Credit Trading and Singapore’s Role

As sustainability-linked products gain prominence, trading in RECs, carbon credits and green derivatives is becoming increasingly popular. Singapore’s focus on high-quality projects could see it build credibility as a reliable player and standard setter in the market for carbon credit trading. Last year, Singapore’s Economic Development Board and the International Emissions Trading Association launched the Singapore Carbon Market Alliance, the first platform in Singapore aimed at helping companies obtain access to high-quality, Article 6-aligned carbon credits. Complementing this, under Singapore’s carbon tax regime, companies are allowed to use eligible international carbon credits to offset up to 5% of their taxable emissions.

Singapore has also established infrastructure-supporting carbon credit trading. Through a joint venture, the Singapore Exchange (SGX), DBS, Standard Chartered and Temasek have developed Climate Impact X (CIX), a global exchange and marketplace for high-quality carbon credits. CIX aims to address criticisms that many projects lack integrity or do not lead to meaningful reductions in emissions by thoroughly vetting projects listed on its marketplace. We have advised companies on the trading of RECs, and expect to see growing participation in this space as corporates seek credible, efficient avenues to meet their sustainability commitments.

Singapore likewise sourced high-quality projects in securing its first tranche of carbon credits recently. In September 2025, the Singapore government announced that it would contract 2.175 million tonnes worth of high-quality nature-based carbon credits from four projects in Ghana, Peru and Paraguay. The Singapore government intends to launch another call for proposals to find other high-quality carbon credits later this year.

Singapore’s carbon credit trading ecosystem is expected to influence energy and infrastructure M&A. Investors are increasingly likely to assess the potential recurring revenue from selling or retiring credits and incorporate carbon assets in deal valuation. Coupled with increased regulatory oversight over investments in energy companies as discussed above, investors may also include as conditions precedent or conditions subsequent targets to implement credible decarbonisation strategies.

Companies providing support or ancillary services for carbon credit trading are also likely to attract more investments.

Increasing use of Virtual Power Purchase Agreements

Power purchase agreements (PPAs) for renewable energy have grown in popularity as they grant purchasers access to green energy at a predefined, stable rate for a long-term period. Singapore is regarded as one of the most solar-dense cities in the world and, coupled with its lack of other resources, solar energy remains the main source of locally regenerated renewable energy. As renewable energy adoption accelerates, we have advised on an increasing number of PPAs over diverse projects in recent years. A common use of PPAs is where a property owner contracts a solar developer who installs and operates a solar project on the owner’s site and sells the electricity generated by the solar panels to the owner. This helps the property owner meet their sustainability goals. However, the installation of solar photovoltaic systems in Singapore is limited by land constraints and the energy generated by the solar project may fall short of the energy required by the property owner.

As a result, more companies have been turning to virtual PPAs (VPPAs) to meet their sustainability goals. Under VPPAs, the developer does not deliver electricity to the property owner’s grid. Instead, the property owner receives environmental attributes associated with the renewable energy produced, most often in the form of RECs. In some cases, this is bundled with a financial hedge for the sale of the renewable energy produced to the Singapore grid. The financial hedge helps the property owner manage its risks and provides pricing stability to the solar developer.

Attracting Global Players with a Regional Footprint

Singapore’s stable regulatory environment, strategic location and connectivity make it an attractive base for global energy companies seeking to expand in Asia-Pacific. Multinational corporations such as TotalEnergies, ENGIE and BP have set up regional headquarters, trading desks, and innovation centres in Singapore to capitalise on the growing demand for energy and sustainability solutions across the region. Singapore has hence become a popular location for regional M&A decisions to be structured, financed or executed out of, and in line with this a significant portion of the deals that we advise on involve parties from different jurisdictions. We expect this to concentrate capital and expertise in Singapore, lead to higher deal velocity, and raise asset valuations for companies with a strong presence in Singapore as opposed to less popular jurisdictions in the energy and infrastructure sector.

Conclusion

The rise of renewable energy, carbon markets, and AI-enabled infrastructure is creating new opportunities for energy and infrastructure M&A, while geopolitical risks and sanctions underscore the importance of risk management. If Singapore can continue to maintain a competitive approach to sustainability and digitalisation, supported by a stable and forward-looking regulatory environment, it is poised to remain a leading centre for energy and infrastructure transactions across Asia-Pacific.