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EMA plans sandbox for new energy tech and business models

Such a feature will help with future regulations and ring fence consumers and market from failure of new ideas

Singapore

THE Energy Market Authority (EMA) is proposing to have a regulatory sandbox where new energy technologies and business models can be given a dry run, in a move welcomed by many energy retailers that have started up in recent years.

In doing this, the EMA is taking a leaf from the UK's energy regulator, the Office of Gas and Electricity Markets (Ofgem), which in February launched a call for interest to start up a regulatory sandbox within which to try out innovative energy business propositions. Ofgem said such a sandbox would enable it to adapt its regulatory framework to future developments in the UK's energy sector.

In Singapore, the EMA currently reviews its regulations on a case-by-case basis to accommodate experimentation with new technologies and business solutions.

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With a regulatory sandbox in place, the industry will be able to test new products and services in a "safe and conducive space", it said in a consultation paper launched late last month.

EMA said: "While the sandbox cannot remove all risks, as failure is an inherent characteristic of innovation, the environment can provide the necessary safeguards to contain the consequences of failure on consumers and the energy market.

"At the same time, the sandbox can provide an avenue for EMA to review its regulatory frameworks and provide appropriate regulatory support to firms."

This development comes as the energy sector is buffeted by technological changes - ranging from renewable technology and energy-storage methods to blockchain - bringing about new business models.

In the consultation paper, EMA said it will not provide funding for proposals selected for the sandbox. However, it will also not levy new charges beyond what is required from the existing system, where applicable.

It added that proposals for the sandbox should be ideas that are new to the market, or make use of technology that is applied differently from how it is currently used. These innovative proposals are also those which cannot be deployed under the current regulatory framework, and should benefit consumers and/or the gas and electricity sectors.

Electricity retailers hailed the proposal, saying it would address current gaps in the regulatory framework and provide a controlled environment under which intellectual property for new business ideas can be protected.

Vijay Sirse, chairman and chief executive of Red Dot Power, described EMA's move as a proactive one.

The company is looking into integrating solutions for battery storage, e-mobility and demand response, each of which is provided in isolation to customers today. Mr Sirse said integrating these will bring down the cost of service to consumers, but no policy framework exists for such integration now.

"This approach could help to address that particular gap in the regulatory framework," he said.

iSwitch, another independent retailer, welcomed EMA's proposal for making it possible for companies to test an idea in a commercially sensitive manner.

Andrew Koscharsky, its general manager of wholesale and trading, said: "We like the fact that it's in a controlled environment, so if something is not embraced by the consumer or if it's an idea that doesn't work, it won't affect the broader market."

iSwitch hopes to test new payment methods and new carbon products, ahead of Singapore's plans to implement a carbon tax from 2019.

Rob Khoo, managing director of SolarPVExchange, a solar quotation comparison and crowdfunding platform, suggested that the sandbox could also benefit condominium owners looking to install solar panels in their development, but now cannot do so unless the application is made by the condominium's managing body, considered the master tenant.

"Condo owners are a sizeable group that wants to do solar but ... we have had to reject a lot of condo owners because they are under a master and sub-tenant agreement."

SolarPVExchange, which was acquired by solar firm Sunseap this year, has created a solution to install a meter at the point where solar energy is generated and in each household unit.

It has also found a way to vary the resistance in the electrical network so the solar energy flows to where it is supposed to be used.

Mr Khoo said: "This sandbox is a good place for us to apply and try to see whether this can work."

If it does, it could also be used in commercial buildings with master tenant and sub-tenant agreements like strata buildings, he added.

EMA is inviting comments and feedback from the public and the industry for the proposal until July 27.

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