Local energy trading and smart-home tariffs – Ofgem picks five playmates for sandbox scheme

Body wants to drive innovation by allowing energy firms to work on ideas outside of regulatory commitments

Energy providers such as EDF, OVO Energy, and Origami have put forward ideas that will be tested in the sandbox

Energy regulator Ofgem will explore how emerging technologies such as blockchain and the Internet of Things (IoT) can drive industry innovation after picking the first five projects to be admitted to its “regulatory sandbox” trial programme.

The sandbox scheme was announced four months ago, with the remit of identifying “energy innovators”, and permitting them to test out their ideas without the need to fulfil the usual regulatory requirements of operation. A quintet of projects have now been selected for the programme, and will be trialled in the sandbox for up to two years.

The first is a peer-to-peer local energy-trading platform developed by a consortium led by EDF Energy. The scheme is designed to allow citizens to obtain energy from local renewable sources and trade it with those that live nearby.

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The second project, from Origami Energy, is a service allowing commercial users to buy energy direct from independent generators. The third involves a new tariffing system built around smart home technology, and was created by OVO Energy, in partnership with VCharge. 

The fourth initiative, developed by Empowered, is another local peer-to-peer energy-trading programme, which involves direct trading of electricity between individuals. Details of the fifth project were not disclosed, as the company behind it wants to remain anonymous.

Aimee Betts-Charalambous, programme manager for IoT and smart energy at industry body techUK, said: “It’s a great time for innovation within energy. Now, more than ever, we are looking for solutions that can drive better outcomes for not just consumers, but also the environment and economy. 

She added: “Convergence is driving disruption and, to harness this opportunity, Ofgem needs to work with industry to understand short-term barriers to innovation. The sandbox adds real value to innovators navigating the energy space. 

“Particularly those with solutions not currently applied within the sector, but which stand to offer real consumer benefits.”

During October and November, Ofgem will be inviting more applications to take part in the sandbox scheme. The regulator then plans to assess the ideas in February of next year.

Sam Trendall

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