June 20, 2022
New study: A new grid strategy enables electrification and cost savings for society

Direct and indirect electrification from intermittent renewable energy sources are key pillars of the green transition. Yet, they pose challenges to the energy system and grid regulation schemes as we know them. Therefore, large-scale projects that produce and consume electricity even before entering the transmission and distribution grids hold a great opportunity for society to enable the renewable energy build-out that we need, without adding large capital costs on grid operators for grid build-out to transport and distribute energy.

We find, however, that existing grid tariffs are not fit for large, flexible consumers such as electrolysers, as they do not take into account the (limited) required additional grid capacity stemming from this type of consumers if allowed to be placed in co-location via direct lines between production and consumption of electricity.

We also find that all users could potentially gain from offering large, flexible consumers, like electrolysers, cost-reflective and capacity-based tariffs, which would even provide additional TSO revenue in the short to medium term. In the long term, capacity-based tariffs for all users would induce much more efficient use of the energy system and smoothen grid capacity demand during all hours of the day, which is exactly the outcome we want to limit peak demand - the true driver of grid costs.

Learn more about the topic here.

For further information, please contact Managing Economist, Signe Rølmer Vejgaard.

June 10, 2022
New study: Societal benefits from Arctic digital submarine cables

The Nordic region is an attractive option for strengthening Europe’s external digital connectivity through submarine cables across the Arctic region. Low temperatures and ample access to renewable energy sources allow data centres to be more energy effective and emit less CO2 in the Nordic region than in other geographical locations in Europe. Additionally, we estimate that an Arctic cable could boost GDP in the Nordic region by more than EUR 1 billion annually.

However, barriers are in the way for Arctic cables to succeed; Submarine cables in the Arctic have not been done previously and the cable construction thus entails risk, the demand for traffic through new cables is uncertain, and some of the gains from increased connectivity will not accrue directly to investors but to the wider society instead. To avoid potential market failures, governments can support the development of submarine cable projects indirectly through research and education networks acting as anchor tenants, which would also benefit research and education institutions.

Learn more about the societal benefits of an Arctic submarine cable here.

For further information, please contact Morten May Hansen, Senior Economist.

June 2, 2022
New study: Parallel Imports of pharmaceuticals in Denmark led to savings of DKK 740 million in 2021

A recent Copenhagen Economics study finds that the total savings from parallel imports of pharmaceuticals in Denmark in 2021 amounted to DKK 740 million, based on data from Danish parallel traders. Since 2018, there has been an increase in savings of DKK 130 million, corresponding to 21%.

The practice of parallel imports of pharmaceuticals has taken place in Denmark and the rest of the EU since the 1970s. In 2021, parallel imports accounted for 16% of turnover in the Danish market for medicinal products.

Learn more here.

For further information, please contact Senior Economist, Søren Brenøe.

May 12, 2022

New regulation means a significant increase in capital costs for commercial real estate exposures.

In a new study conducted for the EMF-ECBC, we find that, following the EU implementation of the Final Basel III, capital requirements for European mortgage portfolios will increase by an average of 18% compared to the end of 2020. This corresponds to EUR 22 billion. Commercial real estate customers are by far the most affected customer group, experiencing an average increase in capital of 40%.   

Learn more about the topic here.

For further information, please get in touch with Jonas Bjarke Jensen, Managing Economist.

May 6, 2022
New article: How to comply and align with the EU policy agenda (NEEM Hub)

The report considers the challenges and opportunities faced by lending institutions in relation to the regulatory and supervisory landscape for Sustainable Finance through the lens of energy-efficient mortgages, starting from a supervisory perspective and then moving on to retail and funding considerations. In particular, it offers detailed insights into the ways in which the multitude of market-led actions under the EEMI can provide a fast track to respond to the challenges and at the same time maximise the related opportunities, thereby providing lending institutions with the tools to increase the resilience of their loan books to climate risks and support the climate transition.

Throughout the report, we address the following challenges and point toward the solutions:

  • ESG reporting and disclosure to market participants
  • Current revisions to the Energy Performance of Buildings Directive
  • Finally, the market is increasingly pointing to the lack of appropriate assets

Find the report on the NEEM Hub website.