Regulatory sandboxes are needed to facilitate innovation in the highly regulated energy sector during its transition to decarbonization. Sandboxes should temporarily eliminate disincentives to cross-sector collaboration, shared risk taking on innovative projects, and regulatory gaps for new technologies. Lessons learned from pilot projects in sandboxes must then inform long-term regulation to continuously foster innovation required for full decarbonization.

1. 1
WORKSHOP ENERGY TRANSITION AND ENERGY REGULATORY SANDBOXES
10 DE MARZO 2022

2. “Learning by doing”

3. Innovation and regulation must go hand in hand
in a highly regulated sector such as the energy sector

4. 4
Conventional Power System
Generation, Transmission and Consumption
TRANSMISION
SUBTRANSMISION
DISTRIBUCION
400 kV
69-132 kV
11-33 kV
400 V
AC

5. 5
Current Scenario
Higher penetration of Power Electronic-Interfaced Systems (PEIS)
TRANSMISION
SUBTRANSMISION
DISTRIBUCION
400 kV
69-132 kV
11-33 kV
400 V
AC

6. 6
Close future situation
¿¿¿¿?????
TRANSMISION
SUBTRANSMISION
DISTRIBUCION
400 kV
69-132 kV
11-33 kV
400 V
AC
DC
SMART
AC+DC
SMART
AC+DC
DC
AC
REDES DE
COMUNICACIÓN

7. Energy transition is a journey
from the present to a decarbonised future
For that journey, we only have two tools:
innovation and rules

9. We use Open Innovation to move deeper and faster,
achieving our goals on energy transition, but we need
Sandboxes to turn POCs on reality.

10. Temporary regulation to facilitate innovation
It is necessary to start up as soon as possible the regulatory sandboxes

11. 11
How do we understand that sandboxes should look like?
Sandboxes should temporarily eliminate the disincentives to innovation
o Cross-activity or cross sector limitations. Limitations on carrying out cross-cutting projects
• Joint projects of Red Eléctrica with other companies inside and outside the energy sector,
• Take into account impact of regulations outside the electricity sector (air navigation, telecommunications, etc.)
o Risk unbalances. The assumption by the regulated company of the entire high risk of innovation projects due to their
technological uncertainty.
• Progress should be made in the specific remuneration treatment of these projects under risk-sharing schemes.
o Regulatory gaps. The absence of regulation applicable to innovations and new technological developments (e.g. storage,
renewable hydrogen, etc).
• The sandbox must provide the minimum regulation necessary to carry out projects with the necessary legal certainty

12. 12
And after the regulatory sandbox, what?
✓ Apply the “learnings by doing” . The learning achieved with the pilot projects must be internalized in the
design of the new regulation
✓ Re-define structures with adequate incentives for innovation in the future.
✓ Re-Think about the cost and profits on innovation project: Profit-sharing schemes, specific
remuneration schemes, tax incentives, compensations…

13. 13
➢ Regulation and innovation must go hand in
hand.
➢ Temporary regulations are needed to foster
innovations and the development of new
technologies.
➢ Long-term regulation should be adaptive and
flexible enough to foster innovation and allow the
actual introduction of new technologies to achieve
the sector goals regarding to energy transition.
In summary