Emergent Energy admitted to regulatory sandbox to trial green microgrids

Ofgem has admitted Emergent Energy to its new “regulatory sandbox,” which allows innovators to receive derogations from specific rules and regulations so they can trial new products and services.

Emergent Energy said this “unique permission” will enable the firm to supply residents in housing developments with green electricity and heat generated onsite through microgrids leased from the developer or landlord.

The company said integrating devices such as solar panels, heat pumps, electric vehicle chargers and batteries into a “smart local energy system” will lower energy bills for residents and bring down costs of installing the equipment for housing providers.

Emergent Energy has been granted a derogation from parts of the Balancing and Settlement Code managed by Elexon, specifically from the requirement that settlement data be collected from a metering system at the boundary between a premise and the wider energy system or be based on the calculated difference from that meter reading when more than one supplier is providing energy to customers on the site.

It will instead be allowed to submit a reading for a premise based on the aggregation of individual customers’ meters, enabling suppliers to be settled for the correct amount of energy without having to enter bilateral agreements with each other.

The company said this will make it easier and cheaper for participating households to switch their supplier, something which is “essential for operating microgrids fairly and cost efficiently”.

Emergent Energy founder and chief executive Reg Platt said: “The ban on gas boilers for all new homes from 2025 and the requirement for all social housing and rented accommodation to be EPC C rated by 2030 will require the housing industry to spend hundreds of billions to drastically cut emissions from their housing developments.

“To stand a chance of delivering net-zero housing, developers need to generate investible returns on infrastructure spending, and the benefits from installing the technology cannot be limited to households in particular tenures or locations. If not, the costs will simply be passed on to customers or taxpayers, and there will be increasing public pressure to abandon the targets, which will be hard to resist.”

Ofgem has granted the company a two-year derogation from the metering requirement as well as an additional one-year transition period in the event that a related BSC modification is raised. However, the regulator has also limited the trial to 2,000 customer – just one fifth of the 10,000 requested by the firm.

Anna Rossington, interim director of retail at Ofgem, said: “All consumers should be able to switch energy supplier and benefit from cheaper bills irrespective of where their home happens to be. We’re pleased that the regulatory sandbox will give Emergent the flexibility to trial a new approach that could help consumers on private electricity networks – many of whom may be living in vulnerable situations – get access to the full range of deals available to other energy shoppers.”

Elexon chief executive Mark Bygraves said: “It is great news that Ofgem has approved Emergent’s proposal to use the regulatory sandbox, which offers a safe space for companies and innovators to trial new concepts and ideas. To meet the net zero challenge, we need to support new ways to decarbonise, and help consumers to play a more active role in the energy market.

“Emergent is the first company to benefit from a derogation specific to the Balancing and Settlement Code within the wider regulatory sandbox, but we are hoping it is the first of many, as innovators begin to look to trial new market models in the electricity industry, on the road to net zero.”

Emergent Energy said it is already in discussions with Stonewater Housing to implement the service, which was developed with the help of funding from Innovate UK, at one of its developments in the North East.