Ofgem announces new round of ‘regulatory sandbox’ programme

Ofgem has announced that there will be a second round of its ‘regulatory sandbox’, a programme allowing energy businesses to trial new ways of working without incurring all of the usual regulatory requirements.

In an open letter, Pamela Taylor, who heads up the regulator’s Innovation Link service, said: “We will open a second window for sandbox applications this autumn. The application window will be open during October and November 2017 – we will publish guidance on how to apply by the end of September 2017. We will then engage with applicants to undertake an initial assessment of suitability for a sandbox by February 2018. Those that are suitable will then need to provide further information and we will progress detailed sandbox discussions.”

Anyone interested in applying should email: [email protected].

Taylor also gave details on the progress of the first round of regulatory sandbox applications, which was launched in February. The regulator received 30 expressions of interest. Taylor said that “the majority of proposed trials were innovative and had a realistic prospect of benefitting consumers but failed to identify a specific regulatory barrier”. The regulator also received “a small number of unsuitable expressions of interest, primarily because they were not asking for a trial of a new product or service but a permanent change in regulation”.

Innovation Link has entered into sandbox discussions with:

  • A consortium led by EDF Energy R&D UK and including Electron, PassivSystems, Repowering London and University College London – trialling a peer-to-peer local energy trading platform. The platform aims to allow residents in urban areas to source their energy from local renewables and trade that energy with their neighbours, increasing self-consumption of low carbon energy and reducing overall energy costs.
  • Origami Energy – trialling a platform that enables commercial consumers to buy directly from independent generators and manage their own imbalance position.
  • OVO Energy – in partnership with VCharge, trialling an innovative tariff supported by smart home technology. The trial product is designed to enable lower bills and warmer homes for customers with storage heaters who are currently limited to economy 7 / economy 10 tariff options, whilst also enabling grid balancing capabilities.
  • Empowered – trialling a local peer-to-peer energy trading scheme. The trial is aimed at enabling consumers to trade electricity directly with each other and yield benefits for the local community and the wider electricity system.
  • One further party who wishes to remain anonymous at this point.

Taylor said: “The support is likely to be in the form of bespoke advice upon which the innovator can rely for the duration of the trial (up to 24 months). The outcomes of the discussions will depend upon us agreeing the regulatory arrangements for the duration of the trial, including protection for consumers and in some cases agreement with third parties.”

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