Cross code energy innovation support CACoP principle Ofgem 2018   

Ofgem Innovation Link Experience What’s the problem? Entry Assessment Feedback Sandbox Monitor & transition Ofgem Innovation Link Experience Ofgem currently provides a feedback service and has experience working with over 150 innovators The provision of feedback and support to innovators has proven valuable in supporting innovation given the complexities of codes and regulation Ofgem provides a sandbox* (derogation) process, however the scope of this is limited by Ofgem’s remit (licences, etc.) Implications of innovative businesses extend beyond the remit of Ofgem We recognise a need for a joined up coordinated process to better enable innovation. *Sandbox: In a regulatory or code environment it means a time limited exemption or derogation from particular rules or obligations to achieve specific aims (prove a concept), subject to given criteria and process.   

What we are aiming to achieve Entry Assessment Feedback Sandbox Monitor & transition Providing a joined up approach toward supporting innovation, across codes and regulation. Coordinated – Ofgem acts as a central coordinator throughout and manages innovator relationship Transparent – information is shared across organisations Accessibility – available to both incumbents and applicants that are not acceded to codes or have a licence Quick and efficient – faster and more direct process   

Provide innovator feedback Support innovator trials How we aim to achieve it Entry Assessment Feedback Sandbox Monitor & transition Provide innovator feedback Most innovators need support in understanding how codes work with regard to their business models This includes identifying barriers and where possible solutions to proceed (within existing framework) Help identify need for a sandbox where criteria is met (innovative, trial ready, reg/code hurdles, benefit to consumers) Develop a shared understanding of possible needs and barriers in the sector Support innovator trials Assess projects that have come through the feedback process Develop derogations against relevant parts of codes, where codes/regs would prevent a trial that meets criteria (many caveats include limitations in what can be derogated, powers to do so, etc.) – on case by case basis Each code and code administrator has a unique set up – powers, arrangements, requirements, etc; Therefore, this process is code specific and would be discussed bilaterally with each code administrator to assess appropriateness If relevant, than options for achieving will be assessed (e.g. BSC P362)   

Why we need a CACoP principle The new principle aims to formalise a relationship between Ofgem, as coordinator of the cross-code innovation process, and the codes, for the purposes of reviewing and providing feedback to innovators in a joined up way. The above process diagram shows Elexon’s role in the cross-code process, including a “sandbox” element. Ofgem coordinates entry to receive queries, engage with innovators/organisations and manage the process. Elexons process shows the relationship with Ofgem, in supporting the feedback process. Additionally, Elexon is aiming to modify the BSC to create a process designed to allow for testing innovative trials. Each code admin would assess the appropriateness, need and value of such an approach if even possible. The CACoP principle is not aimed at forcing codes to pursue a sandbox element. However, we do ask each code to consider it.

Why we need a CACoP principle Where appropriate, code administrators could support the cross-code sandbox by enabling a process that allows for innovative trials to proceed with derogations against parts of the code – assessed on a case-by-case basis. Above is an example from Elexon’s BSC mod P362, which suggests a process for this.