The Australian Energy Market Commission has published its final report on regulatory sandbox arrangements to support proof of concept trials. The final report contains recommendations to the Council of Australian Government’s Energy Council aimed at better facilitating regulatory sandbox arrangements in the National Energy Markets.

The final report follows the publication of the consultation paper on 20 December 2018 that sought feedback from stakeholders on the need for regulatory sandbox arrangements. The commission published its interim advice on 7 March 2019 proposing a regular tree sandbox initiative that could make use of a variety of existing and new tools to be applied according to their suitability within a proposed trial. Stakeholders overwhelmingly supported the introduction of the regulatory sandbox toolkit.

The objective of the regulatory sandbox is to encourage innovation that has the potential to contribute to the long-term interests of consumers. Tools within the regulatory sandbox include the following:

  • Coordinated feedback and guidance and regulatory issues. A new coordinated approach will be implemented to provide feedback and guidance to proponents of innovative trials, technologies and business models. This would be led by the AER as the first point of contact for proof of concept trials. The AER has been tasked with providing “fast, frank feedback” on a range of issues.
  • A new AER regulatory waiver power. Limited regulatory relief will be provided to eligible trials. This will enable trials to obtain an exemption from specific rules or from registration requirements. This would involve a broad power for the AER to grant specific exemptions and waivers to facilitate the conduct of proof of concept trials, subject to trial projects guidelines developed by the AER.
  • A new AMC rule change process for proof of concept trials. Where a rule change or alteration is required, a new rule change process will be available with the aim of completing rule change processes within 10 weeks.
  • Existing regulatory tools. There are a variety of existing regulatory tools including the AER’s ring-fencing waivers and retail exemptions.

The implementation of the recommended sandbox tools will require a package of changes to the national energy law and rules.  You can read the Commission’s full report here.

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