Local energy marketplaces and their interaction with existing licensing regimes have proven to be a particular area of interest within Ofgem’s regulatory sandbox initiative, with BP and British Gas named amongst its new participants.
Yesterday the industry regulator published an update on the lessons it has taken from its regulatory sandbox to date, 20 months after it was first launched.
The regulatory sandbox is Ofgem’s means of allowing innovative projects otherwise blocked by existing regulation to proceed and operate in a controlled environment, with the ambition of helping new technologies and further develop regulation for a more decentralised energy market.
Almost 70 expressions of interest to participate in the sandbox were made across two application windows, launched in February and October last year. A total of seven projects were brought forward, three from the first and four from the second window.
Ofgem had previously disclosed projects successful in the first window and yesterday updated the market on those to have gained support in the second window, including a notable project from fossil fuel giant BP.
Within the sandbox, BP is to develop a platform that would allow consumers with small-scale generation (i.e. solar panels) to sell excess electricity in a marketplace. An existing licensed energy supplier, not named by BP, intends to explore the proposition of accessing more domestic distributed generation that their customers produce, something which the supplier said would help its ability to match supply and demand.
Up to 250 domestic customers from across Great Britain are to participate in a trial using BP’s platform which simulates energy trading. No physical electricity will be bought or sold during the trial.
The trial bears something of a resemblance to Centrica’s ongoing Local Energy Marketplace, which is pairing domestic and commercial customers with renewable generation and battery storage within a single, energy trading framework.
However BP’s intent for a nationwide platform, albeit using simulated trading, would stand to be a significant learning moment for the energy market.
Other participants in the second sandbox window include Verv, which is working with Repowering London and British Gas on a peer-to-peer, solar-powered co-operative in Hackney, a project already noted for its use of blockchain technology.
Green Energy Networks, SmartKlub and SIG are meanwhile collaborating on two trials; one comprising a community benefit society with domestic solar PV, and a second which includes the operation of the Trent Basin community battery project that Limejump took over the management of in March this year.
Projects operating within the regulatory sandbox have two years to do so, after which the regulator is to publish a series of findings and possible interventions.
Meanwhile, Ofgem has published a list of its early findings from its regulatory sandbox so far. Of particular interest is an emerging lack of clarity within energy and tech firms surrounding electricity exemptions for small-scale generation and distribution (such as local smart grids), which is making its interaction with existing licensing regimes all the more difficult.
Ofgem too pointed to the fact that most expressions of interest did not need a regulatory sandbox exemption to continue and merely needed more information.