With innovation at the top of the agenda for energy firms looking to find solutions to the long-term challenges facing the industry, Ofgem’s regulatory sandbox offers an opportunity to identify rules which pose barriers to innovation.
Ofgem launched the regulatory sandbox service in February 2017, enabling innovators to trial new products, services and business models without some of the usual regulatory red tape applying. Engaging with innovators through the process has provided input to regulatory policy development, such as Ofgem’s Future Retail Market Design project.
As part of the second window of the sandbox initiative, oil and gas company BP is developing a platform that will allow consumers who generate their own electricity, known as prosumers, to sell excess electricity within a marketplace. This could create market-based revenues for prosumers, often not available to small-scale domestic generators.
Renewable energy supplier Tonik Energy is partnering BP to explore the opportunities for using a platform to match supply and demand, as well as how customers might interact with and benefit from it. BP’s digital platform simulates energy trading from prosumers. While simulated trades will be based on real-time user data, no physical electricity will be bought or sold during the trial.
The company says it wants to do much more than simply supply clean, affordable gas and electricity. “We plan to halve our customers' bills by 2022 through accelerating the uptake of microgeneration, battery storage and electric vehicle charging infrastructure,” says Tonik’s managing director Chris Russel.
“The trial contributes to Tonik’s vision of changing the way people generate, store, use and now trade energy for a smarter, more dynamic and decentralised electricity market. It is a step towards connecting our members to new technologies and innovative ways of powering their homes with clean energy.”
Up to 250 domestic customers will be involved with the project. During the trial, participants will pay no more than the price of their normal tariff from Tonik. Where simulated trades on the platform create a lower price of electricity, that value will be provided to trial participants by Tonik, representing a saving.