The AEMC has published a final report recommending the introduction of a regulatory sandbox toolkit 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.

Innovation in the energy sector can lead to better services and lower costs for consumers. It is important that the regulatory framework supports emerging technologies and business models that have the potential to deliver these benefits to consumers. 

The AEMC has recommended three new sandbox tools to facilitate trials:

• an innovation enquiry service, to provide guidance and feedback and help businesses get trials up and running quickly where they are feasible under current laws and regulation
• a new regulatory waiver power for the Australian Energy Regulator (AER) so they can temporarily exempt trials from existing rules where this is creating a barrier
• a new AEMC trial rule change process that can temporarily change existing rules or temporarily introduce a new rule of limited application to allow a trial to go ahead.

These three new tools aim to give innovators the ability to trial new approaches that could benefit consumers while still providing appropriate consumer protections. 

While many innovative trials have already taken place or are underway, including virtual power plant demonstrations and Australian Energy Market Operator (AEMO)-Australian Renewable Energy Agency (ARENA)’s joint demand response trial, the AEMC’s recommended changes are designed to make the trial process quicker and easier.

No changes to the energy laws or rules are required to implement the first tool. Implementation of the second and third sandbox tools will require a package of changes to the national energy laws and rules. The final report sets out potential pathways to progress those changes, for the COAG Energy Council to consider.

The Commission collaborated with the AER, AEMO, the Australian Renewable Energy Agency and Energy Consumers Australia to develop the final report and recommendations.

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817

Background

This report follows a request from the COAG Energy Council Senior Committee of Officials and is part of the AEMC’s annual Grid of the future (Electricity network economic regulatory frameworks) review.

It builds on the findings of our March 2019 Interim advice, 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 draft report published in July 2019, with most stakeholders supporting the establishment of regulatory sandbox arrangements. Submissions can be viewed on the project page.