Participatory Experimentation with Energy Law: Digging in a ‘Regulatory Sandbox’ for Local Energy Initiatives in the Netherlands

Abstract

To facilitate energy transition, regulators have devised ‘regulatory sandboxes’ to create a participatory experimentation environment for exploring revision of energy law in several countries. These sandboxes allow for a two-way regulatory dialogue between an experimenter and an approachable regulator to innovate regulation and enable new socio-technical arrangements. However, these experiments do not take place in a vacuum but need to be formulated and implemented in a multi-actor, polycentric decision-making system through collaboration with the regulator but also energy sector incumbents, such as the distribution system operator. Therefore, we are exploring new roles and power division changes in the energy sector as a result of such a regulatory sandbox. We researched the Dutch executive order ‘experiments decentralized, sustainable electricity production’ (EDSEP) that invites homeowners’ associations and energy cooperatives to propose projects that are prohibited by extant regulation. Local experimenters can, for instance, organise peer-to-peer supply and determine their own tariffs for energy transport in order to localize, democratize, and decentralize energy provision. Theoretically, we rely on Ostrom’s concept of polycentricity to study the dynamics between actors that are involved in and engaging with the participatory experiments. Empirically, we examine four approved EDSEP experiments through interviews and document analysis. Our conclusions focus on the potential and limitations of bottom-up, participatory innovation in a polycentric system. The most important lessons are that a more holistic approach to experimentation, inter-actor alignment, providing more incentives, and expert and financial support would benefit bottom-up participatory innovation.