The AEMC has recommended the introduction of formal regulatory sandbox arrangements in the national electricity market to make it easier for businesses to develop and trial innovative energy technologies and business models.
A regulatory sandbox is a framework within which participants can trial innovative concepts in the market under relaxed regulatory requirements at a smaller scale, on a time-limited basis and with appropriate safeguards in place.
The Commission’s proposed regulatory sandbox arrangements consist of a combination of new and existing tools to facilitate proof-of-concept trials. These tools could include:
- a clear process for businesses to access feedback and guidance on regulatory issues so they can get their trials up and running sooner.
- introducing a broad power for the Australian Energy Regulator (AER) to grant specific, time-limited exemptions or waivers to allow proof-of-concept trials to proceed, subject to a “sandbox guideline” to be developed by the AER in consultation with stakeholders. This would require changes to national electricity laws and rules.
- a new AEMC expedited rule change process for proof-of-concept trials that involve significant deviation from existing energy market rules. For example, a trial of aggregated demand response may need a new concept of “baseline energy” incorporated in the rules. This could involve the AEMC making expedited, time-limited rules, possibly restricted to a certain location or group of market participants. If the trial is successful, a permanent rule change could be initiated.
- existing regulatory tools such as the AER’s ring-fencing waivers and retailer exemptions provided by the AER.
To access regulatory sandbox arrangements, trial proponents would need to meet eligibility criteria, and consumer safeguards must remain in place.
The AEMC is proposing an immediate start on developing a new process for coordinated feedback and guidance on regulatory issues for trial proponents, in collaboration with the AER, Australian Energy Market Operator (AEMO), Australian Renewable Energy Agency (ARENA), Energy Consumers Australia (ECA) and other stakeholders.
We will consult further with stakeholders on the detailed design of the sandbox arrangements throughout the year. We aim to provide detailed advice on recommended law and rule changes to the COAG Energy Council in the second half of 2019.
Media: Bronwyn Rosser, Communications Specialist, (02) 8296 7847; 0423 280 341
This interim advice follows a request from the COAG Energy Council’s Senior Committee of Officials and is part of the AEMC’s annual Electricity network economic regulatory framework review. Our work builds on the findings of our 2018 Electricity network economic regulatory framework review, a recommendation of the Finkel review and previous work done by state, territory and commonwealth officials to consider the case for introducing regulatory sandbox arrangements.
The Commission received a strong response to our consultation paper published on 20 December 2018, with most stakeholders supporting the establishment of regulatory sandbox arrangements. Submissions can be viewed on the project page.