Local flexibility mechanisms for electricity distribution through regulatory sandboxes: international review and a proposal for Spain

The EU goal of achieving carbon neutrality by 2050 will require profound changes in the electricity supply chain. In this context, Distribution System Operators (DSOs) are expected to adopt solutions to efficiently integrate distrib-uted energy resources (DER), including the implementation of local flexibility mechanisms. Thus, DSOs would procure ser-vices from DER like distributed generation, demand response, or storage to support grid expansion, attain significant cost sav-ings, and swifter DER integration. However, the use of flexibility mechanisms still faces barriers posed by national regulation. Regulatory sandboxes may be used to overcome this gap by en-abling and supporting the development of local flexibility mech-anisms. This paper performs an international review of four leading countries in the use of sandbox and flexibility, identifies best practices, and, based on the lessons learned, provides rec-ommendations to implement local flexibility mechanisms for DSOs in Spain under regulatory sandboxes.