Ofgem invites innovators to play in ‘regulatory sandbox’

Ofgem has invited businesses in the energy sector to have their say on the possible creation of a new “regulatory sandbox”.

The proposed mechanism would allow businesses to trial innovative new products or services “without incurring all of the usual regulatory requirements”. Successful applicants would also be offered “bespoke” guidance on how to address regulatory barriers.

Ofgem said a regulatory sandbox would help it to improve its understanding of new business models and the potential benefits to consumers. Over the long-run it would also be used to adapt regulations to take account of future developments.

The regulator said it has an “open mind” about the exact form which the support would take. “Hence, we are calling innovators to come forward with information about the regulatory barriers they face in order for us to assess whether there is support that we can offer,” said Innovation Link partner Pamela Taylor, in an open letter to the industry.

Among the support which Ofgem is considering offering, is advice on the interpretation of, compliance with or enforcement of regulatory requirements as well as derogations or exemptions from certain rules.

To be eligible to apply, businesses must offer “genuine innovation” which has a “good prospect” of benefitting consumers. They must be able to demonstrate why they need to make use of the sandbox and outline how and when they expect to conduct a trial. Ofgem will only be able to remove regulatory barriers which it enforces and not those which arise from primary legislation or are enforced by others.

The deadline for final expressions of interest is 17 March 2017.

Late last year Ofgem launched its new Innovation Link to help business make “more informed choices” when developing new products or services.