Steering Renewable Energy Investments in Favor of Energy System Reliability: A Call for a Hybrid Model

The global increase in electricity supply volatility due to the growing share of intermittent renewable energy sources together with recent extreme weather events draws attention to energy system reliability issues and the role of renewable energy sources within these systems. Renewable energy deployment strategies have already become a key element in debates on future global energy systems. At the same time, more extensive use of renewable energy sources implies a higher dependence on intermittent power, which puts the reliability of the electricity system at risk. Policymakers are introducing measures to increase the reliability of energy systems. Paradoxically, support for renewable energy and analyses of energy system reliability have been dealt with by two different and rarely overlapping research approaches. As a result, renewable energy promotion has often been designed without accounting for system reliability. To our knowledge, a model that captures those investment incentives and allows for tuning such financial support does not exist. This paper introduces a hybrid model that can potentially steer renewable energy investments in favor of energy system reliability. We demonstrate the idea of reliability-based support for renewable energy sources in action using a stylized case. Depending on the complementarity of different renewable energy power outputs available in the system, such reliability-based support can substantially reduce the necessity for greater backup capacity, can cut the overall costs of the energy system, and can reduce its environmental footprint.

Ukraine’s stock market: development prospects and global experience of state regulation

The Ukrainian stock market has a huge potential for development, but many systemic problems hold it back. The purpose of the study was to develop proposals for the use of international experience in regulating the stock market of Ukraine. To achieve the goal, the current state of development of the stock market of Ukraine was analyzed and its main problems were identified. It is revealed that the nominal indicators of the volume of the stock market have been decreasing since 2015, but qualitatively the market is developing. The number of organizers of exchange trades and the number of new issues of securities decreased, many licenses to work on the stock market were revoked. At the same time, the responsibility of exchange traders is growing, information sharing is improving, and most traders adhere to accepted trading principles. The article analyzes the legislative changes in the regulation of the stock market, which have occurred since the signing of the Association Agreement between Ukraine and the EU. Separately identified elements of the stock market and technological processes of stock trading, requiring increased government regulation. Despite the increased level of institutional independence of the NSSMC and improvements in depository and clearing activities, the current legal framework allows owners of large businesses to forcibly buy out minority shareholders' shares. There are almost no shares of large profitable enterprises for free sale, and the level of monopolization of key sectors of the national economy is too high. The results of the analysis of U.S. laws and EU directives regulating the operation of stock markets, allowed to formulate proposals for the use of the experience of developed countries in the practice of reforming the stock market in Ukraine. In particular, changes are proposed regarding the obligation of issuers to ensure a minimum free float of their securities, strengthening accountability for violations on the stock market, streamlining the work of investment companies (funds) of various types, investment incentives in the real economy, protecting investors' rights and providing large stock exchanges with the status of self-regulatory organizations. Proposed measures for the development of legal regulation of the Ukrainian stock market will bring us closer to ESMA standards, to sign a Multilateral Memorandum of Understanding concerning consultation, cooperation and the exchange of information with IOSCO, increase overall market capitalization and liquidity of the market and allow the Ukrainian economy to attract capital on favorable terms.

Assessment of the investment attractiveness of the regional economic sectors on the example of the Kirov region

The article focuses on the fact that the general struggle for investment resources, both at the state level and at the regional level, forces us to study the essence, content of the investment process, the forms of interaction between its participants in more depth and in detail, assess the investment potential of individual sectors of the economy and look for ways to improve its efficiency. When studying the investment attractiveness of economic sectors, such a methodology was used, which includes three stages: 1) assessment of the socio-economic situation of the region and determination of its rating in Russia; 2) analysis of the dynamics and structure of investments in fixed assets; 3) identification of benefits that provide investment incentives for external investors in the regional system and deter conditions for the development of investment activity. It has been revealed that there is a significant gap between regions in terms of investment activity in the Russian economy, which contradicts the principle of a single economic space of the country. The Kirov region is analysed in relation to other regions of the country in terms of the indicators under consideration. The most attractive sectors of the region’s economy for investors have been identified. The article shows how important it is to assess the investment attractiveness of individual sectors of the economy of the Kirov region in order to offer the most profitable investment projects in the future.

Instruments of state stimulation of investments in the conditions of Industry 4.0 development

The article describes the methods of state stimulation of investments in the development of R&D and innovation. Based on the research of experts from the Big Four and reports of international organizations, an overview of current trends in the application of methods and measures of state support for investment in R & D and innovation in various countries, including those with a similar economic structure to Kazakhstan, is made. At the heart of modern innovative trends, the development of elements of Industry 4.0 and the digital transformation of industrial enterprises are of great importance for economic growth. In the context of a pandemic, there are crisis changes in the economy, in the behavior of business entities and people’s consciousness, which provide for a proactive role of the state in ensuring stability and forming a sustainable development trend in the post-pandemic period. Crises, as a rule, in addition to destructive consequences, create the need and opportunities for the introduction of innovations and the transition to a qualitatively new technological level of development. One of the main factors of successful investment decisions of enterprises at the present stage is the speed of application of new digital technologies, which are more effective in comparison with investments in the creation of new production capacities. In the conditions of uncertainty of return on investment, the author suggests using the fiscal measures adopted in international practice to stimulate investment in R & D, including for the development of Industry 4.0 in the basic industries of Kazakhstan. The considered structure of investment incentives can be used to increase the scale of investments by large private and national corporations in the MMC and NGS sector, which positively affects the financial flows of enterprises and state budget revenues in the medium term. The author’s conclusions may be of interest to state authorized bodies and company managers when financing digitalization projects of industrial enterprises.

President's Page: Leading the way to a carbon-neutral world

Carbon capture and storage (CCS) and carbon capture, utilization, and storage (CCUS) are expanding at lightning speed as the world increasingly embraces the need for a carbon-neutral future. As it is described on the U.S. Department of Energy (DOE) website, “CCUS is a process that captures carbon dioxide emissions from sources like coal-fired power plants and either reuses or stores it so it will not enter the atmosphere. Carbon dioxide storage in geologic formations includes oil and gas reservoirs, unmineable coal seams and deep saline reservoirs — structures that have stored crude oil, natural gas, brine and carbon dioxide over millions of years” ( https://www.energy.gov/carbon-capture-utilization-storage ). The International Energy Agency (IEA) states that “CCUS is the only group of technologies that contributes both to reducing emissions in key sectors directly and to removing CO2 to balance emissions that are challenging to avoid – a critical part of “net-zero” goals. After years of slow progress, new investment incentives and strengthened climate goals are building new momentum behind CCUS” ( https://www.iea.org/reports/ccus-in-clean-energy-transitions ).

Political Agency, Oversight, and Bias: The Instrumental Value of Politicized Policymaking

We develop a theory of policymaking between an agent and an overseer, with a principal whose welfare is affected by agent-overseer interactions. The agent can increase the quality of policy outcomes through costly capacity investments. Oversight and agent bias jointly determine optimal agent capacity investments. We show that when oversight improves agent investment incentives the principal always benefits from an agent with biases opposite the overseer. Competing agent-overseer biases translate into higher quality policy outcomes than the principal could induce were she monitoring the agent. Effective oversight is necessary for these incentive effects. The results imply that political principals ought to consider the nature of the broader policymaking environment when appointing agents to make policy on their behalf and when designing managerial strategies aimed at motivating agents.