Scheme offers to relax rules for businesses testing innovative products and services

Ofgem has opened the second round of its ‘regulatory sandbox’ that allows businesses to test innovative products and services without facing the full gamut of energy market regulations.

The regulator said its experiences of trialling the scheme since first inviting expressions of interest in February have been “extremely valuable”.

Ofgem is now in the final stages of talks with five different innovators that wish to access the scheme. They include a consortium led by EDF Energy, which is trialling a peer-to-peer local energy trading platform, and Ovo Energy, which is testing a new energy tariff supported by smart home technology.

The regulatory sandbox has similar aims to the ‘innovation link’ service launched by Ofgem in December to give businesses “fast, frank feedback” on the regulatory implications of their proposed business models.

In a blog on the regulator’s website, Ofgem innovation link partner Pamela Taylor said the service had helped many of those who had expressed interest in using the regulatory sandbox to find alternative solutions to the problems they faced, “meaning that innovators were able to consider market entry sooner and without the need for a trial.”

Taylor said in some instances, even when specific regulatory issues were identified, the responsibility for relaxing regulations lay with other organisations such the Department for Business, Energy and Industrial Strategy or industry code panels.

“Therefore, other organisations’ openness and willingness to adopt sandbox type solutions is important,” she added.

“In light of these insights, we’ve decided to integrate our fast, frank feedback service into the sandbox process. This helps innovators assess whether there are regulatory barriers before considering the type of sandbox support that may be appropriate.”

The deadline for expressions of interest for the second round of the regulatory sandbox is 27 October. Ofgem will deal with bids on a first-come, first-served basis and will meet with interested parties throughout October and by 3 November to explore their proposals. 

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