NHH Brage (Norges Handelshøyskole)
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The Potential of Nuclear SMR in the Norwegian Energy Mix : Economic and financial analysis of SMRs in Norway
Get PDFThe primary purpose of this thesis is to determine the feasibility of incorporating small
modular reactors (SMR) into the Norwegian energy mix, considering Norway's role in a larger
integrated power market with direct grid connections to several European countries. Three
analyzes were conducted to evaluate this: Initially, we conducted a literature review to
determine if there is room for nuclear energy in the Norwegian energy mix and to compare
nuclear energy with other relevant sources on a variety of financial and socioeconomic metrics
to determine its potential value relative to relevant alternatives. Finally, we conducted a
profitability analysis to determine the potential value creation of an SMR project. This
approach aims to provide a nuanced perspective on the potential of allowing nuclear energy
production in Norway.
The primary findings suggest that SMR technology has significant potential in the Norwegian
energy mix. With the green transition, the market analysis predicts a substantial increase in
energy demand through 2050. In addition, the energy prices observed over the past few years
are likely to decrease by 2030. With the current energy policies, however, there is a substantial
risk of deviations between demand and supply, thereby severely jeopardizing the power
balance and causing volatile power prices. Potentially resolvable by the addition of a stable
and to a large extent dispatchable energy source, such as SMR. The comparative analysis
demonstrates that nuclear energy has acquired an undeservedly negative reputation, despite
appearing to be one of, if not the most environmentally friendly and secure energy source
available today. In addition to being highly cost-competitive with sources such as offshore
wind and solar, especially when the need for energy storage and external costs is considered.
Our analysis of profitability is based on several assumptions. Seeing as SMR is a new and
untested technology, its validity is difficult to assess. Nevertheless, based on these
assumptions, our findings indicate that SMR projects would require reasonable financing in
order to create shareholder value due to their substantial initial investment. With the long and
stable cash flow, however, our base case estimates indicate that a project could achieve a
payback period of approximately 20 years, with an accumulated positive net cash flow of
between 60 and 70 billion NOK. Which, with discounting effects included, results in a net
present enterprise value of 2-3 billion NOK. In addition, a levelized cost of electricity of
around 65 øre/Kwh is achieved, which is particularly competitive compared to offshore wind.nhhma
Relationship Between Political Parties and CO2 Emissions : Are emissions from Norwegian municipalities influenced by political parties?
Get PDFIn this thesis, we investigate the relationship between political parties and carbon dioxide
emissions in Norwegian municipalities from 2009 to 2021. We initially use a panel data
approach to analyse Norway’s eight largest political parties. Afterwards, we use regression
discontinuity design (RDD), where we focus on the Labour Party and the Conservative Party,
which represent the opposite sides of the political spectrum. To account for the different
characteristics of the municipalities, we divide them into three clusters using k-means
clustering. Our results reveal that the Labour Party is associated with an increase in total
emissions, while the Conservative Party has no statistically significant effect. Robustness
checks confirm these results, indicating an average 11,6% increase in emissions when the
Labour Party is in charge. In conclusion, our findings show that there is a relationship between
political parties and emissions.nhhma
Citizenship/Residence by Investment and Digital Nomad Visas: The Golden Era of Individual Tax Evasion and Avoidance?
Get PDFIn recent decades, increased mobility of capital and labor improved individuals’ opportunities to avoid or evade tax. This chapter explores two programs commonly provided by tax havens that facilitate individuals in dodging taxation in their home country. We first focus on longer-existing initiatives targeting wealthy individuals by offering citizenship and residence-by-investment (CBI/RBI) programs and discuss how they allow individuals to evade taxes. We then delve into the recently launched digital nomad visa (DNV) programs, which grant individuals temporary residence in a country while working exclusively remotely. We provide a comprehensive overview of the key features of existing programs based on a novel, hand-collected dataset. Currently, more than 40 countries offer a DNV program, and half of them are tax havens. Although DNV programs mainly create concerns about tax avoidance, they can also provide tax evasion opportunities similar to those documented in the literature for CBI and RBI programs
The War in Ukraine: A Turning Point for Sustainable Investing? An empirical study of investor preferences, performance and downside risk in the European mutual fund market
Get PDFThis thesis examines the impact of the war in Ukraine on sustainability-related investor
preferences, performance, and exposure to downside risk in the European mutual fund
market. We analyse a sample of 1,952 actively managed global equity mutual funds
registered for sale in Europe using data from February 2021 to February 2023.
We do not find evidence of statistically significant differences in relative flows between
high sustainability funds and their conventional peers in response to the war. However,
investigating specific sustainability strategies, we find climate action-themed funds to
experience higher relative flows and funds applying exclusion of either military contracting
or fossil fuels to experience lower relative flows after the out break of the war, reflecting
changes in public opinion and energy demand. Examining these effects, we observe no
statistically significant difference in relative flows between institutional and retail investors.
We find high sustainability funds and climate action-themed funds to perform better
relative to their peers during the war, but we find no evidence of a relationship between
sustainability and downside risk exposure. Overall, our findings suggest that sustainability
remains a source of resilience through the war and that some investors have increased
their sustainability focus, despite increased acceptance of controversial industries like fossil
fuels and military contracting.nhhma
The Impact of Energy Prices on Food Prices : A Case Study Using Norwegian Monthly Data from 2015 to 2023
Get PDFThis study examines the relationship between energy prices and food prices in Norway. It
specifically focuses on the period following a significant spike in food prices, commonly
referred to as a breakpoint, which occurred in January 2022. We also explore the effect of
energy prices on wheat, meat, and rice. We find a breakpoint in energy prices in April
2020 and a breakpoint in food prices in January 2022.
The empirical analysis reveals mixed results in the period before the breakpoint in January
2022. The Ordinary Least Squares (OLS) and the Autoregressive (AR) model identify a
significant 18-month lag effect of energy prices on food prices, while the Cochrane-Orcutt
model does not show this effect. However, all three models are consistent in showing that
the impact of energy prices on food prices becomes more amplified after the breakpoint in
January 2022.
We observe varying impacts of energy price changes across different food commodities.
While wheat and rice prices increased 18 months after energy price changes, meat prices
remain largely unaffected, except after the breakpoint in the food prices. Our analysis
uncovers a unique trend in food price adjustments: Price increases predominantly take
place in February and July, contributing to 68% of the total increase. Following the
breakpoint in food prices, these two months account for an even larger share of the overall
food price surge, rising to 76%.nhhma
Energy poverty in the European Union Cross-country patterns and vulnerability
Get PDFThis thesis is a quantitative study based on the data gathered from Eurostat. The thesis
investigates energy poverty by observing several sides of the problem: geographical distribution
in the European Union, cross-country pattern similarities in the EU, and vulnerability of
European households to energy poverty, especially when energy prices are unprecedentedly
high.
The analysis is performed with the help of such statistical methods as Principal Component
Analysis (PCA) and Hierarchical Clustering (HC). According to PCA, the first four Principal
Components out of fourteen are sufficient for the analysis since they explain 79% of the
variance in the data. Later, HC is applied to those four identified Principal Components,
showing that it is optimal to divide the EU countries into seven categories by their
predisposition and susceptibility to risks associated with energy poverty. Further, the translog
regression approach, along with the HC, is adopted to make a model with an interaction term
comprised of the cluster and household electricity price variables to assess the electricity price
elasticity of household energy consumption.
This thesis is inspired by similar studies conducted by Recalde et al. (2019) and Chai et al.
(2021). However, the paper proposes a different way of tracking energy poverty across Europe,
based on social, economic, environmental and energy indicators. The findings of this thesis
suggest that the neighboring counties' sensitivity to energy poverty tends to be similar, and
southern European states are noticeably more vulnerable to the severe effects of energy poverty.nhhma
Profit-driven planning and analysis of a WEEE recycling facility with a multi-period MILP model
Get PDFElectronic waste is one of the fastest-growing waste streams in the world. The challenges
associated with the recycling of Waste Electrical and Electronic Equipment (WEEE) represent
both threats, as the improper disposal of this waste can harm the environment and human health,
and opportunities, as this category of waste contains valuable and rare resources that can be
recovered and repurposed, contributing to the circular economy. The EU is leading the way in
improving the collection and treatment of WEEE, but this has not been sufficient to meet the
targets set in its WEEE directive. Therefore, additional efforts must be made to ensure the costeffective
and environmentally sound recycling of WEEE, both in the public and private sectors.
In this thesis, we propose a multi-period MILP model for the planning of a WEEE recycling
facility in Belgium and conduct various analyses to provide insights on what elements are the
most crucial to the profitability of such a facility. The originality of our approach lies in the
multi-period aspect of the model, and the addition of a limited amount of labour to be allocated
to various labour-intensive tasks of WEEE recycling. Our main findings are that labour is the
most critical resource, both in cost and utilization, such that the optimal quantity of WEEE to
process is the one that results in complete utilization of labour, with little to no overtime. As
such, the flexibility of labour, both in possible task allocation and overtime capabilities, is
crucial to the proper functioning of the facility, especially when taking into account possible
deviations from the optimal plan, caused by the heterogeneity of WEEE and other variations
such as the timing of deliveries.nhhma
Diversified vs Specialized Private Equity Funds : A Study of Risk-Adjusted Performance using Insights from Simulations and Empirical Data
Get PDFPrivate equity funds face constraints on the number and type of investments they can
hold due to the time and resources required for counseling activities. This may lead to
specialization in a specific industry or region and leave the funds vulnerable to significant
idiosyncratic risk. This research analyzes the risk-adjusted performance of specialized and
diversified private equity funds using simulations and real-life data. The simulations aimed
to uncover if it was possible to detect the minimum return thresholds for specialized funds
given their risk exposure. The results from the simulation model, where various types
of specialized private equity funds were simulated by combining previous research with
stock market data, were used to formulate a general model that estimated the minimum
required IRR for private equity funds. Finally, the estimated minimum IRR was compared
to the actual return of various private equity funds to analyze the return of specialized
funds relative to diversified funds. The analysis revealed that the simulation model did not
consistently detect the minimum return thresholds for specialized private equity funds. In
addition, an analysis of historical private equity data was conducted to better understand
the effect of diversification on risk and return in private equity. The analysis of historical
data, using a data sample of 1,656 fully liquidated deals from Preqin, indicated that
specialized funds do not consistently outperform diversified funds on a risk-adjusted basis,
possibly due to diminishing returns to scale. However, it appears that the market for
specialized private equity funds is relatively efficient, as investors are able to identify and
invest in the most promising specialized funds, resulting in competitive returns. The
prevalence of specialized private equity funds may be due to the diverse investment needs
and strategies of limited partners or investors in private equity funds.nhhma
From Idealism to Pragmatism: Exploring the Cost Realities of Offshore Wind Development in Norway : A Monte Carlo Approach with Emphasis on Cost Uncertainties
Get PDFThis thesis addresses the inherent uncertainties associated with the cost of offshore wind
deployment in Norway. The primary objective of this study is to provide a realistic estimation
of the comprehensive cost involved in establishing and operating an offshore wind farm while
investigating the influence of uncertainty in key cost variables. To achieve this objective, this
study incorporates historical data from fully commissioned European offshore wind projects
and employs Monte Carlo simulation to estimate the levelized cost of electricity. Furthermore,
a sensitivity analysis is performed to explore the impact of fluctuations in key cost variables.
The findings of this research unveil the potential for the LCOE of a Norwegian offshore wind
farm to exceed previous assessments. This disparity may be attributed to the recent
development of inflation and interest rates. Additionally, the analysis highlights the significant
uncertainties inherent in cost estimation and emphasizes the substantial influence exerted by
the variability in key cost variables. These observations emphasize the importance of
considering the prevailing economic condition when evaluating offshore wind projects.
Considering the Norwegian government’s ambitious plans to allocate significant offshore areas
for wind energy generation, this research highlights the necessity of conducting a
comprehensive assessment before deploying plans.nhhma
Riding the Wave : Timing Implications of Divestitures
Get PDFThis study examines divestiture transactions within industry waves and reveals the impact of
announcement timing on shareholder wealth. Our findings indicate a causal relationship
between divestitures late within a wave and lower abnormal stock returns, relative to firms
that divest earlier. This effect remains robust across different configurations, including a
varying range of event windows, definitions of early and late movers, event study models, and
transaction wave identification models. Strikingly, in contrast to much of the current
transaction research, our study identified no discernible early mover advantage. These findings
draw attention to the need for astute divestiture timing when implementing restructuring
strategies through divestitures. We carefully address potential econometric and sampling
issues to ensure the validity of our results and make a notable contribution by presenting a
comprehensive framework that adapts the prevailing M&A models used to identify industry
waves models to the distinct features of divestitures.nhhma