Dynamic regulation

In the continuity of the Bridge to 2025 Conclusions Paper, CEER decided in 2018 to re-assess how to address the challenges that energy regulators are facing, particularly in the context of energy transition, by publicly consulting on a forward-looking draft 3-year strategy (the “3D strategy” ) and draft proposals for the 2019 Work Programme, the first year of implementation of the 3D strategy.

In the continuity of the Bridge to 2025 Conclusions Paper, CEER decided in 2018 to re-assess how to address the challenges that energy regulators are facing, particularly in the context of energy transition, by publicly consulting on a forward-looking draft 3-year strategy (the “3D strategy” ) and draft proposals for the 2019 Work Programme, the first year of implementation of the 3D strategy.

The core elements of CEER’s 3D strategy are Digitalisation in the consumer interest, Decarbonisation at least cost and Dynamic regulation for European solutions for adaptive regulation in a fast-changing world. Each of the “Ds” should be considered in conjunction with the two others. In CEER’s view, Dynamic regulation might notably be an efficient tool for decarbonisation and digitalisation that is capable of driving growth and innovation within the energy system. 

The main sectors where Dynamic regulation tools have been implemented are the tariff structure, the price or revenue controls, and smart metering. The following tools of Dynamic regulation are commonly used to implement the projects:

• Regulatory sandboxes
• “Classic regulation tools” such as incentive regulation and interconnection issues for islands not yet interconnected to mainland.
• Widening and innovating the participation/consultation of market participants in the process.
• Pilot projects, Pilot regulations and regulatory experiments.

Following examples of regulatory sandboxes and related experiments have been put in place in various countries: 

Reflecting the experience of the recent pandemic with its massive changes in all areas of life, CEER is designing its new strategy which also includes a further development of Dynamic regulation.

External documents 

• Study of CERRE – Centre on Regulation in Europe: Towards a More Dynamic Regulation for Energy Networks, March 2024
• EUROPEAN COMMISSION STAFF WORKING DOCUMENT, Guidance on regulatory sandboxes, testbeds, and living labs in the EU, with a focus section  on energy, July 2023
• JRC study: Making energy regulation fit for purpose. State of play of regulatory experimentation in the EU, 2023
• BNetzA sets maximum values for the innovation tenders, March 2023
• OECD report: Equipping Agile and Autonomous Regulators, September 2022
• 22 projects eligible for the second window of the regulatory experimentation system, April 2022 (in French).
• Evolution of the procedure for the CRE to process applications to the regulatory sandbox, November 2022
• European Commission – Assessment and roadmap for the digital transformation of the energy sector towards an innovative internal market, 13 March 2020.
• The role of sandboxes in promoting flexibility and innovation in the digital age, Going Digital Toolkit Policy Note, 23 October 2019, DSTI/CDEP/GD(2019)7.
• ISGAN Smart Grid Case Studies – Innovative Regulatory Approaches with Focus on Experimental Sandboxes, Casebook, May 2019. The Regulatory Future of Emerging Technologies – A Scoping Paper on Gaps and Opportunities, 19^th session of the Regulatory Policy Committee, 28-29 November 2018, GOV/RPC(2018)16.
• Regulatory approaches and tools to meet the decarbonization challenge, Conference Report, Université Paris Dauphine-PSL, 16^th April 2021
• NationalgridESO on Dynamic Regulation (technical workshop), July 2021
• 8^th Sector Report Energy (2021): Opportunities for competition for electricity exchanges, electric vehicle charging and hydrogen infrastructure 
• IEA´s Gas Market Report, Q4 2021 
• The Energy Transition: Key challenges for incumbent and new players in the global energy system, September 2021 
• Dynamic lightning protection method of electric power systems based on the large data characteristics, June 2021 
• Dynamic pricing in the electricity retail market, May 2021 
• Optimal Dynamic Regulation of Carbon Emissions Market: A Variational Approach, March 2021 
• Smart Systems and Flexibility Plan Monitoring Framework, July 2021 
• Annual Report 2020 – Power Responsive, April 2021 
• The Energy Regulation and Markets Review – 2021 Edition 
• The main tools of incentive regulation in Germany
• Recommendation of the Council for OECD Legal Instruments Agile Regulatory Governance to Harness Innovation – 2021