Financial performance of renewable energy producers: A panel data analysis from the Baltic Sea Region

Abstract

Fighting greenhouse gas emission requires actions to reduce energy usage and increase the proportion of renewable energy sources in the total energy production. Managing this energy transformation process requires significant financial outlays, so financial performance is crucial; it enables energy producers to make future energy transformation decisions. The study discussed in this paper evaluated the financial performance of renewable energy producers in comparison to conventional energy producers in the Baltic Sea Region. The research also aimed to determine how the financial performance is influenced by firm-specific and country-specific factors. We analyzed a unique panel dataset of 328 energy producers, most of which were private limited companies, in the period ranging from 2011 to 2019. Using random effects and fixed effects models, we found that private limited companies had a better financial performance than public limited companies. The size of the company’s assets had an ambiguous effect on its financial performance. Moreover, the difference in the performance of various type of energy producers was small. However, since the Paris Agreement, the impact of electricity prices on both ROA and ROE of the producers has been increasing.