Financial Sustainability of Energy Business Development: The Unregulated Activity Phenomenon

Abstract

The article presents study results showing the increasing role of unregulated activity as a boost for innovative processes in energy companies and their investment appeal. A summary of academic literature, reports by leading consulting companies, and international energy agencies make it possible to outline the landscape of the most economically viable areas of business activity in the energy industry, the most promising of which are energy efficiency, design and deployment of EV charging networks, smart grids, and telecom services. Analysis of financial performance statements of over 30 energy companies from different countries demonstrates the contribution of unregulated activities to their financial stability, which shows in growing profits, capitalization, and stock prices. It is revealed that despite the active promotion of unregulated activities by the state that primarily seeks to achieve the goals of the low-carbon transition, there is a stronger government presence in the capital structure of energy companies, which in the future will slow down investment activity in the industry. In this regard, the discussion considers the barriers to organizing unregulated business in the electricity sector and methods to eliminate them. In particular, a set of necessary conditions is defined, under which entrepreneurship in the industry contributes to improving the efficiency of the main business processes—production and transportation of energy.Ministry of Education and Science of the Russian Federation, MinobrnaukaThe research funding from the Ministry of Science and Higher Education of the Russian Federation (Ural Federal University Program of Development as part of Priority-2030 Program) is gratefully acknowledged