This presentation introduces the concept of regulatory sandboxes for the energy sector, compares a range of national approaches to the sandbox process and assesses what the benefits and shortcomings of sandboxes are in the heavily-regulated energy sector. Speaker: Alexandra Schneiders, University College London

1. Webinar: Regulatory Sandboxes for Energy
Alexandra Schneiders
UCL Energy Institute
27 June 2019, IEA DSM University
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Introduction
• Research Associate at UCL Energy Institute
• Focus: Peer-to-peer energy trading using DLTs
• Law and policy background
• EnergyREV research consortium
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What I will talk to you about today:
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1. What is a regulatory sandbox?
2. Why is it necessary in the energy sector?
3. Examples of sandboxes
4. Pros and cons
5. Recommendations
6. Conclusion

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What is a regulatory sandbox?
“Regulating for uncertainty requires a more flexible approach
that relies on learning over time.”
- Ofgem (UK energy regulator)
• Concept derived from software development
• Testing of innovative business models in controlled ‘live’
environment
• Re-assess regulation based on trial results
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Why is it necessary?
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• New stakeholders, new technologies
• Challenges: meeting of climate targets, more active
role energy consumers, difficulties balancing supply
and demand with high RES injection into grid etc.
• Significant lag between regulation and innovation

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Energy sandboxes
• UK (Innovation Link, 2017- )
• Netherlands (Experimenteerregeling, 2015-2018)
• Belgium (IO.Energy, 2019- )
• Germany (SINTEG, 2016-2020)
• Italy (ARERA, 2010-2019)
• Singapore (EMA, 2017- )
• TBC: France, Australia etc.

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United Kingdom
 Ofgem: regulator, oversees entire sandbox process
• 2 year trial
• Only rules overseen by Ofgem (consumer well-being,
licensing for generation/distribution/supply)
 Elexon: body in charge of balancing and settlement
• 2 year trial, 1 year ‘transition period’ to ask for change
• Only rules in the Balancing and Settlement Code (BSC)
 Only open to licensed parties (and partners)/BSC parties

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 Netherlands
• 10 year trial
• Only open to owners’ associations/cooperatives
 Belgium
• Data exchange platform
• Competitive process for projects
 Germany
• 5 year trials
• Large-scale ‘showcase regions’

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 Italy
• Pre-defined regulatory issues
• Competitive process for projects
 Singapore
• No defined timeframe for trials
• Consultation with industry on reg. changes
 France
• 4 year trial
• Failure to include it in PACTE law

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Sandbox approach is preferable, but not perfect…
Pros:
- Getting to know technology/business model before drafting
or amending legislation
- Evidence-based, flexible policymaking
- Continuous dialogue between business and gvt
- Part of regulator’s role to ensure the best for consumers
- Win-win for both parties re learning
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Cons:
- Uncertain outcome since it is a new process
- Unfair competition concerns
- Questionable timeframes for legislative change
- Not all stakeholders represented
- Not all legislation can be derogated from
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• Engage from the beginning (e.g. advisory services)
• Keep it as realistic as possible: stakeholders (funding!),
applicable rules/laws, timeframes etc.
• Be as transparent as possible (i.e. make documents public)
• Make sure enough staff work on sandbox
• International fora for knowledge exchange, e.g. Global
Observatory on Transactive Energy Models (IEA DSM TCP), to
be launched in 2019, will compare sandboxes.
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Recommendations

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Conclusion
• Sandbox is a step in the right direction
• Regulators get to move at same speed as innovation
• It is still to be seen what the results of the process will be
• Room for improvement (inclusivity, no funding, transparency
etc.)
• Unanswered questions such as:
Need for a European energy sandbox?
Is sandbox a long-term solution in light of inability to
regulate tech with law nowadays?

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Thanks for your attention!
Any questions?
a.schneiders@ucl.ac.uk
@LexScn
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