Balancing and Settlement Code sandbox now available for innovators

Today sees the launch of a new support service where innovators from new and existing companies can trial products and services which could transform the electricity sector

Elexon, manager of the Balancing and Settlement Code (BSC), was the first energy code body to develop a ‘sandbox’ where innovators can trial concepts in a live market environment, without having to meet all the usual energy code rules.

Now that Ofgem has re-launched the energy regulation sandbox, we can offer the BSC sandbox to innovators for the first time.

Sandbox allows innovators to trial new products and services

Elexon’s Chief Executive, Mark Bygraves, said: “We are very pleased to show our support for innovators by giving them the opportunity to trial their products and services.

“A number of potential sandbox users have already come forward, including new and existing energy companies as well as community energy schemes and developers of flexibility platforms. We look forward to working with them, and others.

“Providing a safe space for trialling concepts is a must if we are to meet the net-zero challenge. The sandbox is great way for us to share our expertise with others. It adds to the work we are doing to support the smarter system. This includes opening up the Balancing Mechanism to independent aggregators and preparing the industry for the potential roll-out of Market-wide Half Hourly Settlement.”

Impacts of COVID-19 are an insight of what low carbon future may look like

Neil Barnes, Deputy Director, Future Retail Markets, Ofgem, said: “The energy system, and how we use it is changing, but the transformation needs to accelerate in order to drive a massive shift in how we produce and consume energy.

“The impacts of COVID-19 have given us further insight into what a low-carbon future might look like, with more people working from home, and greater reliance on renewable generation due to lower levels of industrial demand.

“We think this is the right time to launch the updated Energy Regulation Sandbox, helping innovators test and launch new products, services and business models. The first Sandbox showed us that innovators often need relief from code rules, so we welcome Elexon’s pioneering work in developing their sandbox tool.”

How can I apply to use the sandbox?

The BSC Sandbox was developed through BSC Modification P362. It is a way to test proof of concept for innovative products or business models in the live electricity Settlement environment.

Applicants can apply for a derogation (a temporary relaxation of BSC rules) so that their concept can be tested. Any innovators wanting to apply to use the BSC Sandbox should make an application to Ofgem’s Innovation Link team. The Link is the single point of access for innovators to all Sandbox tools.

Applicants for the BSC Sandbox must then apply to Ofgem for a derogation and use of the sandbox setting out:

• The BSC rules that would need to be changed so that their concept could be trialled.
• The benefits that their product would bring to the electricity sector and consumers.
• How long they would need for their trial (the maximum length of a trial is two years).

Help for applicants to develop their sandbox proposals

We will work with applicants acting as a ‘critical friend’ to develop their proposals and prepare the application. The BSC Panel will review all applications for derogations and make recommendations to Ofgem for a final decision.

Applicants do not need to be a BSC Party (an organisation that is signed up to the BSC rules) to apply for the sandbox. However they would need to agree to accede to the BSC, before their trial starts. This is important as it means that new companies that have not yet joined the BSC can still apply.

Once a trial is completed, if it is successful the applicants would need to raise a Modification to permanently change BSC rules so that the concept transitions to ‘business as usual’.  This means that the rule change can also benefit all BSC Parties, which is important for encouraging competition.