The Innovation Link

Ofgem’s Innovation Link is a ‘one stop shop’ offering support on energy regulation to businesses looking to introduce innovative or significantly different propositions to the energy sector.

We want to support innovative ideas that bring benefits to consumers. This also helps us understand emerging trends in the sector and identify areas in which our regulation may need to adapt to sustain innovation.

If you have a new business proposition, we offer a dedicated service to provide fast, frank feedback on the regulatory framework and what it might mean for you. We are also developing a programme of general support to help innovators get started in understanding the regulatory framework.

Fast, frank feedback

Eligibility criteria

Innovators with new or significantly different business propositions for the energy sector can use this service. It may be particularly helpful for innovators developing propositions that do not fit neatly in to the existing regulatory framework. We want to help developers understand the regulatory implications of their ideas before they launch.

We have four eligibility criteria to receive support:

  1. Innovation: The proposition must be ground-breaking or significantly different to what is currently in the market. It could include either technological or business model innovation.
  2. Consumer benefit: It should be clear how the proposition would benefit consumers. This could be, for example, because it would lead to direct benefits such as lower energy bills or better customer service, or indirect benefits such as increased competition in the market. 
  3. Background research: You should have researched the concept and be able to show that you have attempted to find out about the regulatory implications.
  4. Need for support: The Innovation Link provides information on the regulation in the energy sector. It does not provide business advice on the commercial viability of a project. You should be able to tell us why you need Link support. For example, what it is that you wish to understand from a regulatory perspective or how you think Link support would benefit you.

If your business proposition does not meet these criteria, then Ofgem has other, more suitable ways of engaging that we will refer you on to.

What you can expect from us

When you email the Innovation Link we will generally reply within two working days.

We will allocate you a case manager who will contact you to arrange a meeting or teleconference to discuss your business model and to see if you are eligible. This case manager will be your point of contact throughout and will be in touch within five working days.

If you are eligible for Link support, your case manager will arrange a second meeting or teleconference in order to work with you to refine the queries you’d like help with. This is an important stage and will give us an agreed set of questions for us to answer.

If your query is relatively straightforward then we expect to provide an answer quickly. More complex queries will take longer to answer. We should be able to give you an idea of expected timescales and will update you as we go through the process.

When we provide a response it will usually be in a meeting or teleconference and followed-up in writing. The purpose of our feedback is to help you understand our regulatory regimes, and to provide you with an informal steer on potential regulatory implications in the early stages of developing your project. However, it is not a substitute for your own due diligence. Depending on the nature of the feedback we have given, we may stipulate that the information is non-binding and confidential. See our standard legal disclaimer. 

Legal disclaimer

The following applies when we make a statement to a person that gives them informal feedback on their proposed innovation.

  1. The views expressed in the statement may not have been endorsed by our senior management or any relevant Ofgem Boards. If you are aware of any information that you believe would affect our position expressed in the statement you should inform us immediately.
  2. The authors of the statement are only in a position to offer some initial views of an indicative and non-binding nature on the material provided to them. The positions reflected in the statement may be subject to change or review in certain circumstances, for example (without limitation):
    • on further consideration of the information provided;
    • on receipt of further material information;
    • where a member of Ofgem staff or a relevant Ofgem Board reaches a different view; or
    • following a change in law that relates to the proposed innovation.
  3. The statement does not represent an approval or endorsement of your proposed innovation. Neither you, nor anyone acting on your behalf may refer to the statement, either expressly or by implication, in a way that suggests that Ofgem has approved, endorsed, or otherwise accepted that you or your innovation complies with regulatory requirements.
  4. The statement is made without prejudice to any decision or action Ofgem may take in the future, including enforcement or other regulatory action.
  5. Ofgem accepts no legal liability in contract or in tort for the accuracy and/or quality of the information provided.
  6. You may not, without our express permission, share the statement or contents of documents with a third party (either in part or in full), other than person(s) involved in developing or financing your proposed innovation. This does not prevent you disclosing the statement to your legal advisers or auditors, provided attention is drawn to this disclaimer. Neither the Gas and Electricity Markets Authority nor any person acting on its behalf may be held responsible for the use which may be made of the information contained in the statement.
  7. It is not Ofgem’s role to provide legal advice and any information or comment provided by Ofgem is not a substitute for independent legal advice on your own circumstances. It is your responsibility to assess compliance with regulatory requirements.

What we need from you

You must explain:

  • what your project is
  • why it is going to make a difference
  • what research you have undertaken on the regulatory implications so far.

Confidentiality of information

We will handle your commercial information with sensitivity. We will only share it with colleagues in Ofgem that can help answer your query. We will not share it with any third parties without your consent.

Regulatory Sandbox

In February, the Innovation Link asked for expressions of interest for an energy regulatory sandbox to allow innovators to trial business propositions that will benefit consumers without incurring all of the usual regulatory requirements.
We are pleased to have entered into sandbox discussions with: 

  • A consortium led by EDF Energy R&D UK and including Electron, PassivSystems, Repowering London and University College London – trialling a peer-to-peer local energy trading platform. The platform aims to allow residents in urban areas to source their energy from local renewables and trade that energy with their neighbours, increasing self-consumption of low carbon energy and reducing overall energy costs. 
  • Origami Energy – trialling a platform that enables commercial consumers to buy directly from independent generators and manage their own imbalance position.
  • OVO  Energy –  in partnership with VCharge, trialling an innovative tariff supported by smart home technology. The trial product is designed to enable lower bills and warmer homes for customers with storage heaters who are currently limited to economy 7 / economy 10 tariff options, whilst also enabling grid balancing capabilities.
  • Empowered – trialling a local peer-to-peer energy trading scheme. The trial is aimed at enabling consumers to trade electricity directly with each other and yield benefits for the local community and the wider electricity system.
  • One further party that did not wish to be named at this point.

The support is likely to be in the form of bespoke advice upon which the innovator can rely for the duration of the trial (up to 24 months). The outcomes of the discussions will depend upon us agreeing the regulatory arrangements for the duration of the trial, including protection for consumers and in some cases agreement with third parties.

There are a further three projects that can go ahead without sandbox support. These include parties who wished to apply for supply licences under the licence lite process and whose business model works with the current arrangements.

We received 30 expressions of interest in the regulatory sandbox. 

We assessed all the expressions of interest against our published criteria. 

We found that the majority of proposed trials were innovative and had a realistic prospect of benefitting consumers but failed to identify a specific regulatory barrier. It is likely that many of these can operate within the current regulatory framework. We are offering these companies our fast, frank feedback service and should we identify regulatory barriers we will consider sandbox support in a future round.

There were a small number of unsuitable expressions of interest, primarily because they were not asking for a trial of a new product or service but a permanent change in regulation, which is not appropriate for the short-term nature of the sandbox. We also received expressions of interest in trialling new regulation and policies in existing projects; these related to trialling new network charging arrangements. We welcome the offers to support policy development and have recommended that the companies engage with the relevant policy team.

We will open a second window for sandbox applications this autumn. The application window will be open during October and November 2017 – we will publish guidance on how to apply by the end of September 2017. We will then engage with applicants to undertake an initial assessment of suitability for a sandbox by February 2018. Those that are suitable will then need to provide further information and we will progress detailed sandbox discussions.

If you would like to discuss this then please contact the team at innovationlink@ofgem.gov.uk

General support

In early 2017 we will roll-out a programme of practical support to help innovators get started in understanding the regulatory framework.

We are currently developing our thinking around what the programme could involve. Our ideas include providing seminars/webinars and/or published information targeted at early-stage innovators to help them understand the regulatory framework.

Get in touch

If you are interested in this service or have ideas on formats or topics that would be most helpful, please email us at innovationlink@ofgem.gov.uk

Publications and updates

  • Published: 4th Jul 2017
  • Open letters and correspondence
  • 1 Associated documents
This open letter provides an update on sandbox discussions with Ofgem’s Innovation Link and a second window for applications this autumn.

  • Published: 6th Feb 2017
  • Open letters and correspondence
  • 2 Associated documents
We are inviting expressions of interest for a Regulatory Sandbox. This will allow innovators to trial business propositions that aim to benefit consumers, without incurring all the usual regulatory requirements.