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 legislation has been enacted to allow the Australian Energy Regulator (AER) to issue trial waivers and the Australian Energy Market Commission (AEMC) to make trial rule changes providing relief from national energy frameworks, including the National Electricity Rules (NER), the National Energy Retail Rules (NERR), the National Gas Rules (NGR), well as relevant provisions of the National Electricity Law (NEL), National Energy Retail Law (NERL), National Gas Law (NGL). Legislation has also been enacted to allow the Essential Services Commission (ESC) to issue waivers providing relief from Victorian energy frameworks under the Victorian Regulatory Sandboxing function.
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 (NEM) (which covers New South Wales, Victoria, Queensland, South Australia, Tasmania, and the Australian Capital Territory.) We don't have jurisdiction to issue or consider a waiver relating to Western Australia and the Northern Territory.
- 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 will work collaboratively with each other to:
- Assess trial applications
- Consult on trial project viability, and
- Craft trial waiver or trial rule change 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 power is broad. Under Regulatory Sandboxing legislation, the Energy Innovation Toolkit trial waiver power enables the AER to, where an application is successful, exempt an innovator from having to comply with the following in all National Electricity Market (NEM) jurisdictions and the Northern Territory in accordance with their respective application acts:
- Section 12 of the National Electricity Law (NEL) and/or the National Electricity Rules (NER) or a provision of the NER (Draft National Electricity Law section 18ZL(1).
- Section 88 of the National Energy Retail Law (NERL) and/or the National Energy Retail Rules (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 (NGL) and/or the National Gas Rules (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 (ESC) to craft bespoke trial waiver conditions.
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 (NER), the National Gas Rules (NGR), and the National Energy Retail Rules (NERR).
Under Regulatory Sandboxing legislation, the AEMC can assess trial rule change requests and make trial rules to allow trials to proceed. This could be used to temporarily amend existing rules or to temporarily introduce a new rule of limited application.
Trial rule change requests will be received through the Energy Innovation Toolkit, and will be forwarded to the AEMC for assessment. Where a trial requires both a trial rule change and trial waiver, the AEMC will work closely with the Australian Energy Regulator (AER) to craft trial rule change conditions.
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 function will enable eligible innovators to trial new products and services in Victoria’s energy market with a trial waiver.
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 framework.
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 (NER)), the market (as defined in the NER), the declared distribution systems and declared transmission system for gas (as defined in the National Gas Law (NGL)), or markets for natural gas.
There may be circumstances where AEMO could participate commercially in a sandboxing trial. In this instance, the Australian Energy Regulator (AER), Australian Energy Market Commission (AEMC), Essential Services Commission (ESC) and AEMO will work together to ensure any potential conflicts, as well as confidential information, are appropriately managed.
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's (AER) Regulatory Sandboxing Trial Projects Guideline.
- The Essential Services Commission’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.