Regulatory sandbox clauses introduced into Hungarian energy legislation

Assessment of regulatory sandboxes and their potential

Abstract

The study examines regulatory responses to a flexibility conflict that, following Max Weber, is a tension between the so-called reality requirements and the rigidity of the regulatory environment. Energy regulation has been highly evaluated in recent years due to the COVID-19 pandemic, the energy crisis in the wake of the Russian-Ukrainian war, and climate change. The urgency of green transition and the need for a stable yet sustainable energy supply have required the legislator to develop regulatory models that can both facilitate innovation and maintain secure and predictable regulation. Experimental legislation captures these new types of models. Within this concept, the study focuses on so-called regulatory sandboxes recently introduced into Hungarian energy legislation and the experimental clauses that institutionalise them, assessing and illustrating the nature and direction of such regulation. The study draws on the experience and lessons of international practice to illustrate the strengths and identifiable weaknesses of Hungarian regulation. The second part of the study assesses the potential of sandboxes, particularly in the light of developments brought by emergency legislation significantly affecting the energy sector. The aim of the study, in addition to presenting the regulatory framework, is to facilitate the application of regulatory sandboxes to make space for energy innovation.