## 5 Economic Opportunities and Benefits
### Cost-Benefit Analysis and Investment Case  
Demonstrating the economic soundness of a pan-European grid digital twin hinges on rigorous cost-benefit analysis (CBA) that captures both direct financial gains for network operators and wider societal value [16]. At its core, a CBA must quantify the reduction in capital expenditure achievable through better utilization of existing assets, the operating-expense savings from more efficient maintenance and congestion management, the avoided costs of unserved energy and renewable curtailment, and the improvements in reliability that can be monetized using standard metrics such as SAIDI, SAIFI, and the value of lost load [20]. Against these benefits stand the upfront and recurring costs of sensors, communications networks, computing platforms, software licenses, integration, cybersecurity measures, and training [24]. Because many of these costs are booked as operating expenses while most avoided grid reinforcements are capital projects, CBAs must bridge accounting categories and often adopt a long-term horizon: a reinforcement deferred five or ten years ahead still constitutes a present-value benefit if the digital twin enables that postponement [16]. The timeframe is therefore a decisive parameter. Initial investments may increase tariffs in the short term, but benefits over the medium and long term, such as reduced infrastructure costs, more affordable renewable integration, and lower balancing expenses, ultimately return value to consumers and society [2]. Studies commissioned by the Atlantic Council and the European Commission indicate that although digital upgrades increase current expenditure, they enable lower cost generation, support faster electrification, and eventually stabilize or reduce total system costs [48]. To reflect these dynamics, several EU projects have proposed dynamic cost-benefit analysis frameworks that evaluate advantages over the entire life cycle of an asset while accounting for social externalities, including avoided carbon pricing and spillover effects in industrial innovation [16]. At the policy level, these broader benefits are highly relevant, as European leadership in digital twin technologies could generate export revenues and create high-skilled employment opportunities that extend beyond the boundaries of conventional power sector accounting [25]. For network operators, the investment calculus depends heavily on regulatory remuneration. Traditional models that reward capital additions can undervalue software and data platforms classified as OPEX [16]. Moving to TOTEX-based incentive schemes, or granting specific innovation allowances, ensures that a euro saved by avoiding a line construction is at least as valuable as a euro spent on digital infrastructure [23]. Under such frameworks, the business logic is straightforward: if spending EUR 50 million on digital capability forestalls a EUR 200 million reinforcement, both operator finances and consumer tariffs benefit. Pilot projects are beginning to put numbers on these propositions. Within TwinEU, Artelys is conducting impact assessments of demonstration cases, translating improvements in forecast accuracy, market price convergence, and renewable hosting capacity into social-welfare gains [5]. Preliminary findings from national pilots, such as distribution-grid twins in the Netherlands and transmission-level studies in Germany, have already reported favorable benefit-cost ratios once avoided curtailment, deferred CAPEX, and reliability improvements are included [41]. Formal cost-benefit analyses are also prerequisites for accessing European Union funding instruments. The Connecting Europe Facility, Horizon Europe, and potentially the Projects of Common Interest framework all require transparent benefit metrics. These may include the amount of capacity unlocked per euro invested, the reduction in congestion or emissions per euro spent, or the contribution to innovation targets [49].