QUEST and Pollution Probe have released their first Innovation Sandboxes project report: Enter the Sandbox: Developing Innovations Sandboxes for the Energy Sector.

The report identifies best practices and lessons learned to design and develop Innovation Sandboxes in Canada by looking at sandboxes implemented, or being developed, in ten jurisdictions worldwide.

“The jurisdictional scan we conducted demonstrates that Innovation Sandboxes are an effective tool,” Tonja Leach, QUEST Executive Director says. “They ensure that the energy transition is as fast and effective as possible, while protecting those parts of the current system that continue to provide value, and ensuring that durable long-term frameworks for innovation are created.”

Innovation Sandboxes address non-technological barriers to innovation through a continuous process of learning-by-doing that is inclusive of all stakeholders involved in the energy system. The different tools embedded in Innovation Sandboxes enable an institutional change that fosters innovation by facilitating knowledge exchange, informing public policy, and improving decision-making.

The report highlights that only well-designed Innovation Sandboxes can be efficient tools to accelerate innovation and that there is no “one” type of Innovation Sandbox. A sandbox design cannot be replicated from one jurisdiction to another because it needs to be tailored to the energy context of each jurisdiction and the outcomes the collaborators wish to achieve.

Innovation Sandboxes can be developed by governments and regulators — in some cases both — to pursue specific policy outcomes. In only one case, in Belgium, was the sandbox initiated by utilities. Innovation Sandboxes also consider diverse energy sources: while the focus has tended to be on the electricity system, some include, or will be expanded to include, natural gas. A few have also included transportation and electric vehicles.

Among the key lessons learned, the report stresses that successful Innovation Sandboxes need to prioritize ongoing learning and emphasize collaboration, transparency and knowledge sharing as well as a need for a culture of innovation and leadership. It also underlines that the regulators’ roles will need to change to be part of the energy future.

“Regulators need to be part of the solution in facilitating low-carbon innovation and in working with new players,” Richard Carlson, Director of Energy Policy at Pollution Probe explains. “Innovation Sandboxes provide a powerful way for regulators to embrace their new role safely and transparently. They enable them to develop enquiry services, which is most crucial for new entrants. Dissociating regulatory activities from guidance activities is essential and requires that enquiry services come with some liability considerations. Innovation Sandboxes also help regulators to engage new stakeholders, and in a different way. Non-energy traditional players do not speak the regulator’s language and feel overwhelmed by the regulatory ‘machine.’”

QUEST and Pollution Probe will continue working with provincial, territorial, and federal policymakers, regulators, and other stakeholders to develop tailored foundational Innovation Sandboxes frameworks that will promote long-lasting conditions for innovation.

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