## 5 Economic Opportunities and Benefits
### Addressing the Opportunities  
Realizing the identified economic potential requires a coordinated realignment of regulatory models, investment incentives, and market structures. A fundamental step involves regulatory recognition of operational expenditures for digital infrastructure as investment equivalents. The adoption of TOTEX-based remuneration schemes and innovation allowances is essential to eliminate disincentives for deploying advanced digital technologies, including analytics platforms, sensor networks, and cybersecurity systems. By acknowledging the deferred capital expenditure value of avoided grid reinforcements, regulatory authorities can enable cost recovery mechanisms that accommodate software licenses, cloud services, and platform integration as legitimate grid investments. Furthermore, the introduction of performance-based incentives tied to measurable outcomes such as reductions in redispatch costs, improvements in reliability metrics including SAIDI and SAIFI, or increased hosting capacity for distributed energy resources can reinforce the strategic integration of digital twin solutions into the operational frameworks of system operators.  
In parallel, the establishment of harmonized cost-sharing methodologies across borders is indispensable to prevent asymmetrical burdens where one national regulator underwrites expenditures for benefits that materialize predominantly in neighboring systems. Such methodologies should be based on transparent criteria, including proportional system size and estimations of cross-border operational gains.  
To accelerate adoption, it is equally important to cultivate public-private partnerships and pooled investment mechanisms. These structures reduce entry barriers for small and medium-sized distribution system operators and foster collaborative development of shared assets such as federated data lakes, standardized interface frameworks, and coordinated cybersecurity monitoring. EU-level instruments, including Horizon Europe, the Digital Europe Program, and the Connecting Europe Facility, should prioritize funding for initiatives that embody open and modular architectures and conform to common standards such as the Common Information Model and the Common Grid Model Exchange Specification. Grant conditions should mandate the publication of non-proprietary interface specifications to ensure interoperability and avoid vendor lock-in.  
The deployment of early-stage demonstrators that quantify economic and operational benefits, such as deferred grid upgrades and enhanced congestion management, can provide empirical evidence to support regulatory endorsement and mitigate investment risks. Embedding digital twin functionalities within existing flexibility markets, including local demand response auctions and distributed energy aggregation schemes, can further strengthen the business case by enabling new value streams for prosumers and aggregators. These mechanisms collectively reinforce the economic viability and scalability of a pan-European grid digital twin.  
To synthesize the key economic dimensions of the digital twin, Table 3 compiles the principal opportunities identified in the literature, the corresponding economic rationales,and the authors' recommended implementation strategies. The table reflects how targeted financial models and market designs can unlock substantial system-level benefits and support the long-term viability of the digital twin initiative.