Cities play a significant role in energy-related climate change, yet they also have considerable potential to implement solutions for sustainability challenges. Furthermore, cities and local governance can act as innovation "hubs," driving sustainable urban transitions. Urban Living Labs are becoming essential for achieving sustainability goals in cities, operating at the crossroads of research, innovation, and policy. These labs are designed to create, demonstrate, and evaluate urban interventions in real time. Despite their growing prominence, our understanding of their nature and purpose is still limited, with a lack of critical analyses. This study employed a qualitative methodology to identify critical aspects for deploying Positive Energy District (PED) Labs, structured into three steps: questionnaire distribution, qualitative analysis of responses, and formulation of research questions. The questionnaires focused on barriers, drivers, and stakeholders, yielding valuable insights into the factors influencing the implementation of PED Labs. Key findings revealed nine categories of barriers, with social and financial factors emerging as the most significant challenges. In terms of drivers, the necessity for climate change mitigation, strong local networks, and improved political frameworks were identified as essential conditions for fostering PED Lab initiatives. The analysis highlighted seven stakeholder groups involved across six phases of PED Lab deployment, with governments recognized as pivotal actors in the process. To further guide implementation, the study proposes a SWOT matrix to encapsulate resources, capabilities, and requirements necessary for successful operation or replication of PED Labs, emphasizing that while specific conditions may vary, general principles must be considered in all contexts.