London’s West End has nothing like the joint creative impact of the annual Edinburgh arts festivals, argues Anthony Alderson, a dominant figure behind the city’s annual fringe: “It is the source for so much in this fast-growing part of the economy, and vital in the development of so much talent.” Yet he feels Britain does little to aid this annual, self-renewing artistic powerhouse – an engine that drives the country’s impressive entertainment industry.

The Pleasance runs 28 venues in Edinburgh, as well as three in the English capital, and has been around for 40 years this summer. For half that time Alderson has been its director, taking both the credit and the criticism for fringe shows that allegedly exploit the dreams of performers.

“Without a shadow of a doubt the festival is the heart and soul of new writing for theatre. There is nowhere else like it on earth for excitement,” he claims, talking inside the Pleasance Dome on Friday, just as a huge power cut temporarily shuts down central Edinburgh, cancelling hundreds of shows and costing the fringe several tens of thousands of pounds in just 40 minutes.

The Pleasance has been the proving ground for some of the biggest names in entertainment: from Graham Norton, whom Alderson remembers setting out the seats for his own audience in his first year, to Armando Iannucci, Steve Coogan, Omid Djalili, Stewart Lee, Miranda Hart, The League of Gentlemen, and one of his own personal favourites, Greg Davies, whose show We Are Klang, in 2006 , is “still one of the funniest I have ever seen in my life”. Nina Conti, the groundbreaking ventriloquist, is a regular Pleasance sell-out star and returns this year. Each has gone on to shape Britain’s culture. Theatre directors and playwrights such as Patrick Marber and Jez Butterworth also started out at the Pleasance. Indeed, Alderson rails against such false divisions between theatre and comedy, which feed each other.

“This is the place to come to be judged alongside performers who already have big careers,” he says. Gloomy testimony from young artists who break their backs and bank accounts to appear on the fringe highlights a real issue, but is only half the picture, Alderson claims. High risk, he believes, has always been an element of performing, although successful venues should strive to level out the playing field. “There is an idea that we larger venues are just landlords, but we understand our industry and go to see the work all year. We are not just renting out rooms. This is a shared risk. If the shows fail, we fail.”

His job is maintaining “a fine balance”, he says, between the costs to performers and the ticket prices. “If we don’t balance the books, it all goes. The costs of mounting shows have gone up hugely and there are bigger bureaucratic hoops to jump each year.

“Our box office take last year was over six million pounds and our charity surplus was £13,000. So it’s true, the Pleasance is a ‘going concern’. But we only have 27 days a year from which to pay our bills. And, of course, you hope that enough of the people who come to perform, people who might well lose money, go on to make some the rest of the year. It has always been a high-stakes investment.”

For Alderson, cheaper accommodation is the answer to a fairer fringe, and the Pleasance offers it, along with subsidised food, to staff and to the volunteers the venue is sometimes criticised for relying upon.

The charitable status set up by the Pleasance’s previous impresario, the late Christopher Richardson, was not simply an advantageous tax move, Alderson insists. “It was about what we believed.” The Pleasance Theatre Trust helps poorer artists, while a more recent entity, The Edinburgh Partnership, is a collaboration with nine theatre companies across Britain aimed at boosting the touring model.

Two years ago Alderson’s venue was at the centre of a fringe scandal when the veteran comic Jerry Sadowitz found his second show cancelled because he had revealed his genitals to an audience member. The Pleasance said his material did not “align with our values”. Such confrontational fare can sit uneasily in an organisation that has also run children’s shows for 14 years. Alderson now says it should all be on the menu: “Trigger warnings are important. We are sensitive to these things, so there are watershed times and on stage nudity continues. We can get things wrong, but I actually believe that the strong emotions prompted by art are good for us. We are far more fragile if we hide from them.”

One Pleasance show already making headlines this year is American YouTube star Anna Akana’s bleakly comic set It Gets Darker, in which she tells a stalker story that she compares to Richard Gadd’s controversial Baby Reindeer drama. Her own story is now likely to be filmed, she says, with meetings planned with rival streaming giants.

The contrasting art that fills the city is part of the point, Alderson is convinced. This year the fringe includes comics featured on the OnlyFans website, best known for X-rated content, who will compete for live audiences with world-renowned performers in the international arts festival, which the fringe wraps itself around. This year its adopted theme is “Rituals That Unite Us”, an attempt to “bring artists and audiences closer together than ever before”, according to festival director and Scottish virtuoso violinist Nicola Benedetti. This weekend her spectacular immersive light show, Where to Start, launched her programme, summoning up the spirit of inspiration, “the glint in the eye, the fire in the belly”, as a narrator explained, that illuminates Edinburgh each summer – even in a power cut.