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Energy Regulation Sandbox: Guidance for Innovators

The Sandbox in a nutshell

We all know that we’re standing at the edge of a system transformation and that innovation will have a central role in remaking our energy landscape. Over time, as the system transitions, the rules that govern it will evolve too. But, where an innovator wants to trial something novel, or launch a new business now, some rules might be ‘barriers’ to making this happen. Make no mistake, the rulebook rightly sets the high standards we expect of an essential service, but that’s not to say that the rules are perfect or should be static, or that they will always be capable of delivering the outcomes we want.

The Sandbox can help innovators trial or bring to market new products, services, business models and methodologies without some of the usual rules applying. The Sandbox has 4 tools in its arsenal. For trials, we can provide bespoke guidance, comfort (shared risk) and time-limited derogations (relief) from specific rules.  For market entry, we can confirm (not an endorsement) that an activity is permissible, and, where a rule is blocking an innovation, potentially remove this by way of a derogation.

To remain relevant in the face of rapid, technology-driven system change, regulators need to harness new perspectives and tools. We need to complement strategic reforms with approaches which allow us to keep pace with innovation. That’s why we developed the Sandbox: to allow innovators to experiment and bring propositions to market, while continuing to protect consumers. It lets us work with innovators and gather evidence to inform permanent reform.

Who’s this guidance for?

It’s for innovators who intend to (or already) operate in a regulated energy market, want to offer something different but are facing a ‘rule-based’ barrier. It’s available to start-ups, new entrants, established sector players, public or third sector bodies. It’s not only for licence holders, or members of the various industry codes. We’re happy to work with innovators at an R&D stage, through to those close to launch. So long as the innovator can set-out the issues they need assistance with, the sandbox may be suitable.

This Guidance replaces previous Ofgem Sandbox guidance. This document is much fuller than what we’ve published previously. This responds to innovators’ requests for greater clarity and direction about what’s in scope and allowable. Although innovators are the primary user, this Guidance can also help industry, innovation funders and supporters, policy makers and other stakeholders understand what the Energy Regulation Sandbox is, and how it works.

Applying for support

Innovators complete an application form. We’re the single point of entry for all requests and will coordinate involvement from the relevant Code Administrators. Unlike the previous Sandbox, applications can be submitted at any time, rather than meeting strict windows-based deadlines.