The emergence of innovative technologies and business models in the national energy markets can bring significant benefits to consumers.

In a rapidly transforming market however, regulatory hurdles can create barriers to innovation and the realisation of these benefits.

Accordingly, policymakers have been developing a formal regulatory sandbox framework to unlock innovation across the energy supply chain.

Under a formal regulatory sandbox framework, participants can trial innovative business models, products and services in the market under relaxed regulatory requirements on a time-limited basis and with appropriate safeguards in place.

In 2019, the Australian Energy Market Commission (AEMC) provided advice to the COAG Energy Council on regulatory sandbox arrangements to support proof-of-concept trials in the national electricity and gas markets, including proposed draft rules to implement these changes.

The COAG Energy Council agreed to the AEMC’s recommendations in November 2019 and is currently consulting on the draft Statutes Amendment (National Energy Laws) (Regulatory Sandboxing) Bill 2020 (Draft Bill) to establish the regulatory sandbox framework.

AGL supports the Draft Bill. We believe the regulatory sandbox package of reforms will provide an important opportunity to accelerate the development of technologies and business models in the national energy markets to deliver greater benefits to consumers.

We recommend the innovative trial principles informing the Australian Energy Regulator’s (AER) and AEMC’s determinations on the granting of a trial waiver or making of trial rules contemplate a range of additional matters to broaden the scope of the arrangements.

We also consider a five-year time horizon for the granting of trial waivers and/or making of trial rules may be too long, given the current pace of technological change and market reform, and risks unfairly advantaging trial proponents. Based on our experience in a range of trials with the Australian Renewable Energy Agency, we would recommend a 3-year time horizon with a power to extend on formal application.

We elaborate our feedback in our formal submission, a copy of which is available here.