Experimenting with Law and Governance for Decentralized Electricity Systems: Adjusting Regulation to Reality?

Abstract

Moving towards a low-carbon society calls not only for technological innovation, but also for new modes of governance. However, the current legal framework of the electricity sector, and the modes of governance that it establishes, impede innovation in the sector. To overcome this obstacle, in 2015 the Dutch government adopted a Crown decree for experiments with decentralized renewable electricity generation (Experimentation Decree) with the aim to generate insights on how to adjust the legal framework. The question remains whether regulation is being adopted to real-life settings, i.e., which lessons can be learned from experimentally acquired results regarding new modes of governance for decentralized electricity systems? To answer this question we apply an interdisciplinary approach: we investigate which modes of governance are established in the Experimentation Decree (legal research) and which ones are implemented in nine projects (governance research). Under the Decree, associations have to carry out all tasks in the electricity supply chain and can engage in collective generation, peer-to-peer supply and system operation. Other modes of governance, new actors for emerging activities and consumer involvement are limited. We conclude that the Experimentation Decree is too restricted regarding new modes of governance for a decentralized electricity system in real-life settings.

Innovation in the European Energy Sector and Regulatory Responses to It: Guest Editorial Note

“…When it comes to experimentation, however, the national government, in the case of the Netherlands, did show a proactive regulatory response. It succeeded in creating the conditions under which experiments with decentralized energy supply (even involving a vast number of GIs) could be undertaken, i.e., by formal 'policy experiments,' 'Green Deals,' the 'IPIN' program and the Experimentation Decree as reported by Lammers & Diestelmeier [24]. Despite their restrictions, these experiments gave room to stakeholders to learn about niche and business case development of decentralized energy innovation and related legal and governance challenges.…”

“…The discussion is taken further by Lammers and Diestelmeier, who focus on the energy initiatives' collective decentralized production [24] and by Saintier, who investigates the rise of Community Interest Companies, defined as 'consumers and local actors' collectives,' in the United Kingdom [25]. Saintier points out that the motivation of the UK government to support such initiatives 'is the non-commercial nature of such local actors and the hope that their involvement will combat NIMBYism' [25].…”

“…Another issue that was frequently addressed in our special issue, concerned (the conditions to spur sound) experimentation with energy innovations and applicable governance modes (Lammers & Diestelmeier [24], Heldeweg [34], Warbroek & Hoppe [23]). The article by Lammers & Diestelmeier [24] showed that in practice, experiments and the legal framework under which they serve, are very restrictive, which limits their contribution to the design and adaptiveness of regulatory frameworks to energy innovations.…”

“…Sectoral regulations have a vast impact on decentralized governance, causing many civil servants to act as 'wounded lions,' clinging to strict interpretation and hence implementation of permit systems and other regulatory necessities, causing institutional inertia and a lack of adaptive capacity to cope with emerging social innovations in the energy sector. Lammers & Diestelmeier [24], Warbroek & Hoppe [23] and Heldeweg [34] address legal practices and instruments under which experiments with renewable energy innovations take place. They observe vast restrictions that impede good use of the experiments regarding institutional learning and adaptation and call for reflexive meta-governance and creation of designing absorptive and resistant institutional settings, while meanwhile allowing for self-regulation within instantiations of legal institutions, to organize (governance) experiments.…”

“…A third type of regulatory response addressed in the contributions concerns experimentation. It addresses current flaws in experimentation legislation and addresses the institutional and legal conditions under which experiments with energy innovations can prosper and evoke adaptation of regulatory frameworks (Lammers & Diestelmeier [24], Heldeweg [34], Warbroek & Hoppe [23]). …”