What exactly is a ‘reality lab’?

How can rules be designed in a way that facilitates innovation? What are the side-effects? What works best is to try out new rules before rolling them out – for instance in a reality lab. Read on for more information.

Illustration: Erneuerbare Energien, Stromnetz und Verbraucher unter einer Lupe© BMWi

This is what it’s about: new rules, for instance on energy use, are tried out in a pilot region over a limited period of time. This allows for experience to be gained and for regulations to be honed and improved before they are rolled out.

The world is changing at an ever faster pace. New technologies and business models are taking hardly any time at all to find their way into new industries and aspects of our lives. They come with new opportunities for consumers and businesses and can make our lives much easier. And they are also having major effects on job profiles, working conditions and value chains. This makes it all the more important to have a legal framework in place that leaves scope for this kind of innovation, without allowing for our high regulatory standards to be lowered, for instance where consumer rights are concerned.

Reality labs are important test benches for economic policy. They make it possible for policy-makers to test new rules in a limited geographical space that also offers legal certainty, and to observe the effects of the new regulatory instruments on innovation and vice versa. The main objective here is to design regulation that is pro-innovation and flexible, free of red tape and that also looks at the impact innovations have on society at large. Reality labs are particularly important when it comes to digital innovations for use in important sectors of the economy, such as energy.
Reality labs to find the rules that will govern the energy system of the future

The Federal Ministry for Economic Affairs and Energy has established a very large lab for energy, entitled ‘Smart Energy Showcases - Digital Agenda for the Energy Transition’ (SINTEG)”. The objective here is to develop new rules that might be used to govern our future energy sector. One of the concepts tested here are digital flexibility markets designed to help avoid grid congestion. Consumers would be able to adjust their electricity use patterns, for instance by using smart storage devices or by shifting their energy use to different times and benefit from this economically. Also being tested are solutions and business models for sector coupling, which means using electricity from renewables for heating and transport purposes.

Sending the ‘parcelcopter’ to an Alpine pasture

Often, companies initiate pilot projects for which they require a special licence. Most of these project are about testing the technical feasibility of an innovation and not so much about any regulatory adjustments that may be required.
DHL, for instance, tested drone deliveries of goods to remote Alpine areas in a project dubbed ‘parcelcopter’. During the trial period, drones were used to deliver parcels to places situated in the Bavarian region situated between Reit im Winkl and the Winklmoos Alpine pasture. DHL needed a special licence in order to be able to carry out these flight operations. In Hamburg, Hermes Germany tested its ‘Delivery Robot’ for parcel deliveries. Parts of Karlsruhe now been opened for an autonomous and connected driving project, from which the organisers are hoping to gain new insights about the need for regulation and (safety) standards.

Reality labs are key to better regulation

As reality labs are extremely important for economic policy, the Federal Ministry for Economic Affairs and Energy established a ‘project group on reality labs’ in 2017. This group has commissioned a large-scale study into the economic, administrative and legal requirements for reality labs, the findings of which are to be used to draw up guidance for the design of reality labs by the public administration. The results of the study are expected to become available in October 2018.

Parallel to this, the project group on reality labs has engaged in numerous expert talks, organised workshops with scientists, industry representatives and the various tiers of the public administration to form a broad-based network. A needs analysis has been completed and topics for research been defined.
The working group is also in the process of designing new pilot projects, for instance for digitising public-sector statistics; and it is looking at potential new projects on blockchain and the sharing economy etc.

Further information