Regulatory sandboxes in the energy sector - review and learnings for the case of Switzerland

Abstract

Regulatory sandboxes allow testing innovations that face regulatory barriers under current market conditions, granting exceptions from regulatory rules in place for projects limited in time and space. They represent a comparatively new but promising policy instrument for testing and evaluating innovation where it cannot be implemented under a current regulatory framework. Regulatory sandboxes can increase security on both sides: While policy makers can better assess, if the change of current rule sets is beneficial to society, the business driven side may improve its understanding on how to derive value streams from a new technology or business practice, and how investments are affected. Such a new regulatory regime is highly beneficial in sectors that are dynamically transformed through new technologies, as is the case for the electricity sector and digitalization. This paper presents a review of recent national approaches to build regulatory sandboxes in the electricity sector. Based on a thorough, comparative analysis, generalized best practices are retrieved. Finally, the work shows how such best practices can be transferred during a real implementation of a regulatory sandbox - using a recent example from Switzerland as a case study.