About Regulatory Sandboxing trials
The Regulatory Sandboxing trials function is live and accepting applications. This page explains the kinds of regulatory relief we provide and how our Project Partners will work together to facilitate trials.
The Regulatory Sandboxing trials function is live and accepting applications
Regulatory Sandboxing
What states and territories are within Energy Innovation Toolkit scope?
The Energy Innovation Toolkit has jurisdiction to handle enquiries and consider or approve trial applications relating to matters within the National Electricity Market
- Enquiries relating to Western Australia should be referred to the Economic Regulation Authority.
- Enquiries relating to the Northern Territory should be referred to the Utilities Commission.
How will Energy Innovation Toolkit Project Partners will work together to facilitate sandbox trials?
Energy Innovation Toolkit Project Partners
- Assess trial applications
- Consult on trial project viability, and
- Craft trial waiver
The Regulatory Sandboxing trial waiver function allows the Australian Energy Regulator (AER) to grant a time limited trial waiver for eligible trial projects, exempting an innovator from having to comply with specified rules for a period of time to allow a trial to proceed. The Victorian Regulatory Sandboxing trial waiver function allows Essential Services Commission (ESC) to issue trial waivers providing time limited relief from Victorian energy frameworks. For more information, please see our trials page and the AER's Trial Projects Guidelines.or trial rule changeRegulatory Sandboxing legislation will provide the Australian Energy Market Commission (AEMC) with a new power to make temporary rule changes to allow trials to proceed. This could be used to temporarily amend existing rules or to temporarily introduce a new rule of limited application. In deciding whether to make a trial rule, the AEMC must take into account the list of principles established in the Regulatory Sandboxing innovative trial principles, and the requirements listed in the Regulatory Sandboxing eligibility requirements, to determine whether a proposed trial rule is genuinely innovative. For more information about the innovative trial principles and eligibility requirements as they apply under the Energy Rules to both trial rule changes and trial waiver requests, please see the Australian Energy Regulator's Trial Projects Guidelines.conditions.
The AER will monitor trials, to make sure trial conditions are adhered to and that consumers are protected.
Trials are limited to five years, with the possibility of a once-off extension of up to one year. Some trial projects may require a combination of complementary mechanisms, where allowed by the energy rules. Although our Project Partners grant different kinds of regulatory relief and are responsible for different aspects of trial assessment, consultation and monitoring, the Energy Innovation Toolkit will function as a central point of contact for innovators to lodge trial applications and for the Project Partners to collaborate to administer trials.
For more detailed information on the scope of the regulatory relief we offer and the different responsibilities of our Project Partners, see below:
The AER regulates wholesale and retail energy markets, and energy networks, under the national energy rules and laws.
The scope of the AER’s trial waiver
- Section 12 of the National Electricity Law
The National Electricity Law (NEL) is contained in a Schedule to the National Electricity (South Australia) Act 1996. It establishes the governance framework and key obligations for the operation of National Electricity Market (NEM), including the regulation of access to electricity networks. It is supported by the National Electricity (South Australia) Regulations. The NEL is applied as law in New South Wales, Queensland, Victoria, South Australia, Tasmania and the Australia Capital Territory by application statutes. The Northern Territory has also applied the NEL with variations that cater to local requirements.(NEL) and/or the National Electricity RulesThe National Electricity Rules (NER) are made under the National Electricity Law (NEL) and govern the operation of the National Electricity Market (NEM). The NER determine how companies can operate and participate in the competitive generation and retail sectors, and also govern the economic regulation of electricity transmission and distribution networks. Among other functions, they provide the regulatory framework and processes for market operations, power system security, network connections and access, pricing for network services in the NEM and national transmission planning. In Victoria, however, the national rules for network connections are modified, with many of the network service provider roles being assigned to the Australian Energy Market Operator (AEMO).(NER) or a provision of the NER (Draft National Electricity Law section 18ZL(1).
- Section 88 of the National Energy Retail Law
The National Energy Retail Law (NERL), a Schedule to the National Energy Retail Law (South Australia) Act 2011, regulates the supply and sale of energy to retail customers. The Law is supported by the National Energy Retail Rules (NERR) and National Energy Retail Regulations.(NERL) and/or the National Energy Retail RulesThe National Energy Retail Rules (NERR) govern the sale and supply of energy (electricity and natural gas) from retailers and distributors to customers in New South Wales, Queensland, South Australia, Tasmania and the Australian Capital Territory. The NERR have the force of law, and are made by the Australian Energy Market Commission under the National Energy Retail Law (NERL).(NERR) or a provision of the NERR (Draft National Energy Retail Law section 121C(1)).
- Sections 91BJ, 91BRD, 91BRR and/or 91LB of the National Gas Law
The National Gas Law (NGL) and the National Gas Rules (NGR) set out the regulation of access to natural gas pipeline services provided by transmission and distribution pipelines under the national energy market framework.(NGL) and/or the National Gas RulesThe National Gas Law (NGL) and the National Gas Rules (NGR) set out the regulation of access to natural gas pipeline services provided by transmission and distribution pipelines under the national energy market framework.(NGR) or a provision of the NGR (Draft National Gas Law section 30W).
Where a trial requires both a waiver and a custom Victorian licencing arrangement, the AER will work closely with the Essential Services Commission
The AER will be responsible for monitoring trials projects to ensure the safety of consumers. All sandbox trial proponents will report to the AER on trial progress and outcomes. The AER will facilitate trial project knowledge sharing, and will deliver trial outcome insights to policy makers to inform regulatory change.
Read more about the AER’s approach to delivering Regulatory Sandboxing trials here.
The AEMC is responsible for making and amending the National Electricity Rules
Under Regulatory Sandboxing
Trial rule change
Read more about the AEMC's approach to making rule changes here.
In Victoria, the ESC has responsibility for licensing and licence exemptions in the electricity and gas markets. The ESC licenses various activities including electricity and gas retail and distribution, electricity transmission, and electricity generation.
The ESC’s new Regulatory Sandboxing
From 1 June 2022, trial waivers will operate alongside licences and licence exemptions as a distinct authorisation category in Victoria’s energy market. The ESC will be able to consider applications for a trial waiver. These Victorian-specific waivers will provide exemptions from section 16 of the Electricity Industry Act 2000 and section 22 of the Gas Industry Act 2001.
Trial waivers granted by the ESC may contain bespoke conditions that respond to the unique characteristics of the innovative activity of the project that an innovator is proposing to trial in Victoria. Trial rule changes are not a feature of the Victorian regulatory sandboxing
Read more about the ESC’s role in delivering Regulatory Sandboxing here.
AEMO manages electricity and gas systems and markets across Australia, helping to ensure Australians have access to affordable, secure and reliable energy.
The Energy Innovation Toolkit must consult with AEMO in relation to any potential impact of a sandbox trial on the operation and administration of energy markets. We must also consult with AEMO relation to any potential impact of a sandbox trial on AEMO’s operation of the power system (as defined in the National Electricity Rules
There may be circumstances where AEMO could participate commercially in a sandboxing trial. In this instance, the Australian Energy Regulator
This could include a separate team of AEMO staff assisting the Energy Innovation Toolkit with the trial assessment with appropriate information safeguards in place, or AEMO sitting out of the assessment altogether.
Read more about AEMO’s role in supporting the delivery of the Energy Innovation Toolkit here.
ARENA’s purpose is to support the global transition to net zero emissions by accelerating the pace of pre-commercial innovation, to the benefit of Australian consumers, businesses and workers.
ARENA will not have a role in the assessment or monitoring of trial projects, and will not have access to the Energy Innovation Toolkit Portal. Instead, ARENA will direct innovators to the Energy Innovation Toolkit to ensure that their projects are supported with informal regulatory guidance and, where appropriate, trials.
Read more about what ARENA does here.
Knowledge Sharing and Disclosure
How will trials support innovative regulation change?
Launching a trial is not a guarantee that your trial’s new regulatory setting will automatically progress into a permanent rule change. Rather, trials may provide supporting evidence that can inform, and in some cases accelerate, rule change decisions.
Trial proponents will be responsible for regularly reporting to the AER on trial outcomes. The AER will analyse these outcomes and provide reports to policy makers, making sure they have the information they need to take trial evidence into account when considering regulatory changes.
Trial proponents can also directly submit rule change requests to the AEMC providing supporting evidence from trial outcomes prior to the conclusion of their trials. Note that you don’t need to be a trial proponent to make a rule change request – these can be made by members of the public at any time
How will trials share knowledge?
The Energy Innovation Toolkit website will host a register of trial projects under consultation, and a register of active trial projects in receipt of waivers issued by the AER. Information about trial projects may be used to create knowledge sharing materials hosted by the Energy Innovation Toolkit, so that trial learnings can benefit the wider industry.
We are committed to protecting your confidential information, and we acknowledge that knowledge sharing will require very careful judgement on our part as to what information is appropriate to share.
To find out more about how your information will be shared, and your responsibilities in identifying confidential information, see our knowledge sharing and information disclosure page.
Further information about key issues like assessment of applications against information and eligibility requirements, proponent reporting obligations, trial duration, extensions, and trial project monitoring can be found in the guidelines below:
- The Australian Energy Regulator
The Australian Energy Regulator (AER) regulates electricity networks and covered gas pipelines in all jurisdictions except Western Australia. The AER sets the amount of revenue that network businesses can recover from customers for using these networks. The AER also enforces the laws for the National Electricity Market (NEM) and spot gas markets in southern and eastern Australia, as well as monitoring and reporting on the conduct of market participants and the effectiveness of competition.'s (AER) Regulatory Sandboxing Trial Projects Guideline.
- The Essential Services Commission
The Essential Services Commission (ESC) is an independent regulator that promotes the long-term interests of Victorian consumers with respect to the price, quality and reliability of essential services. In Victoria, the ESC has responsibility for licensing and licence exemptions in the electricity and gas markets. The ESC licenses various activities including electricity and gas retail and distribution, electricity transmission, and electricity generation. The ESC also makes and enforces customer protections and other rules predominately in the electricity and gas retail and distribution markets in Victoria, where the National Energy Retail Law (NERL) and the National Energy Retail Rules (NERR) don't apply.’s (ESC) Trial Project Guideline (specific to projects operating under Victorian energy frameworks.)
Before getting in touch to discuss your trial project, we recommend that you engage with our energy regulation resources and our interactive Regulation Navigator tool, which may help you identify regulatory barriers to target with your trial application.