Regulatory sandboxes: experimenting with energy regulation

Experimental workshops lend a community dimension to Fluvius chair

On 7 February, the names Eandis and Infrax will disappear to make way for the new company Fluvius. “Although the merger is in line with the economic logic and political momentum, that doesn’t make the challenges any smaller.” That is why the Director of Regulation & Strategy Donald Vanbeveren and our energy professor Leonardo Meeus have decided to supplement the chair's traditional one-on-one research with interactive workshops. The first workshop was about regulatory sandboxes – and Donald pronounced it “super!”

Donald Vanbeveren (Fluvius)
“Although the merger of Eandis and Infrax to form Fluvius is in line with the economic logic and political momentum, that doesn’t make the challenges any smaller.” Donald Vanbeveren, Director of Regulation & Strategy, Fluvius

“We all know that distribution system operators (DSOs), such as Fluvius, will start to play an increasingly important role in a decentralised energy landscape”, says Professor Meeus. “The only question is, what is that role? During the first workshop, we addressed a subject which is currently still at an experimental stage for many DSOs, namely regulatory sandboxes.” 

Regulatory sandbox: testing new business models

Regulatory sandboxThe energy landscape is changing so fast and so drastically that regulation just can't keep up. After all, regulation involves a time frame which simply fails to keep pace with the day-to-day reality. The regulators want to use regulatory sandboxes to create a kind of testing ground which allows various parties to test new business models on a small scale by making an abstraction of specific regulations. In terms of scale, a sandbox is somewhere between an R&D pilot project and a fully-fledged project. This also makes the results of the sandbox interesting for the industry: they gain an idea of the feasibility without having to roll anything out on a large scale. 

Wildcards

Alongside Fluvius, of course, the other regular members of the Centre, UK Power Networks Services (UK) and Netz-Nö (AUT), naturally also took part in the workshop. “In each session, we also give wildcards to companies or organisations that might make an interesting contribution”, says Donald Vanbeveren. “For this first workshop, we gave a wildcard to the regulators VREG (B), ACM (NL) and BnetzA (D) and the operators Innogy (D) and Stedin (NL). The workshop was attended by both the chairman of the board and managing director of the VREG. The discussion which we were able to conduct with them there was particularly useful.”

“If the regulators admit that they can't always keep pace either and allow the industry to request exceptions to rules, this also shows them where the obstacles lie.” Professor Leonardo Meeus

Learning from each other

Professor Meeus nods. “This interaction between the regulators and the industry is incredibly important. If the regulators admit that they can't always keep pace either and allow the industry to request exceptions to rules, this also shows them where the obstacles lie. They may not feel the need to modify the rules immediately as a result, but you learn from the mere fact that people have been able to point them out. The British, Dutch, German and Flemish energy companies could also learn from each other. Some countries have made more progress than others. The Netherlands is working on new regulation which is supposed to come into force this year. And Germany offers financial incentives to companies which participate in the regulatory sandboxes.”

Open discussion

These interactive workshops allow Fluvius to conduct a far more open discussion with its regulator, the VREG. “A conventional meeting automatically puts us in a different position. The open discussion during the workshops also means, in the light of later evolutions,  that the various stakeholders will find themselves on the same wavelength more quickly.”