SINGAPORE (July 18): Singapore’s wholesale electricity price surged for the second time in a week, a sign of further volatility in the market amid a global power crunch.

The cost of one megawatt-hour jumped to more than S$4,200 (US$3,000) for three hours on Sunday night, the longest period of such high prices this year. That’s close to the maximum limit of S$4,500 permitted on the wholesale market, and comes after the price briefly spiked to a similar level last Monday.

While the exact cause of the recent spikes isn’t clear, volatility typically occurs when supplies are tight, such as when plants go offline. The recent price jumps have taken place at times when demand doesn’t appear to be elevated.

An average of 6.8 gigawatts of power was supplied on Sunday, little changed from a week earlier and near the average 7.2 gigawatts supplied so far in July, according to data from Energy Market Co, the market operator.

Energy Market Co and six power retailers contacted by Bloomberg did not immediately respond to requests for comment.

The latest prolonged surge implies a “tightness in the market that could not easily be mitigated”, said James Whistler, managing director of Vanir Global Markets Pte. High prices are an incentive for power generation companies to sell electricity. Prices staying high without anyone selling suggests “a fundamental lack of sufficient capacity”.

Countries around the world are wrestling with soaring fuel prices and power shortages, with the turmoil exacerbated by Russia’s invasion of Ukraine.

While most Singapore consumers are protected from jumps in wholesale prices, the volatility presents challenges for some power retailers. They buy electricity from the wholesale market, but sell to customers at a fixed rate, and elevated prices could cut their profit margins.

Price swings last year resulting from a gas shortage forced several providers to cease operations.