Why IPPs go Merchant:

The magic of turning ordinary assets into extraordinary value

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Are you watching closely?

The year is 2025. Across Europe, solar and wind portfolios are humming along, delivering steady revenues under long‑term PPAs. Your 200 MW solar portfolio in the Netherlands is printing €7,000 - 12,000 per hour on a bright afternoon. A 50 MW wind farm in Northern Germany runs at similar numbers per MW. On the opposite side of this German village, we find a 20 MW battery nearby waiting quietly for wholesale price spikes to charge and discharge at full force.

Perfectly ordinary renewables, decent money and safe PPAs. Nothing to see here.

Except these assets could be earning significant upside without adding a single new panel and simply by learning one new trick, helping balance the grid and increasing optionality over all possible markets.

Let’s get into the magic of it all.

As Michael Caine’s character in the 2006 film ‘The Prestige’ explains..every great magic trick consists of three parts or acts:

Act I – The Pledge

"The magician shows you something ordinary"

Here’s something ordinary: we declare you the owner of the 200 MW solar portfolio in the Netherlands and the 50 MW wind + battery farm in Northern Germany we just mentioned. You're now a multinational IPP with renewable generation humming across Europe. Thank me later.

Life is great. Your assets are performing, revenues are flowing in, and your business plan is working out. But here's where it gets interesting: with one wave of a wand, this business plan could be even better.

Optionality. Balancing markets spike to €400/MWh and your battery sits idle. During grid oversupply, you could curtail solar at good rates but your panels keep producing as usual. The revenue opportunity is untapped because of unorganised IT software or it’s locked in with the PPA-buyer.

You realise the PPA market has changed. The days of easy, standardised solar PPAs are fading. Deal sizes have shrunk from 70-80 MW to below 50 MW. Negative prices are becoming frequent, capture rates are declining, and there's growing saturation for standalone solar profiles especially during peak production hours when everyone is generating.

This is why going (partially) merchant with your portfolio matters, to capture the increasing movement of value towards optionality and multi-market arbitrage. The fact that the merchant value is there is clear, but between knowing and doing sits a gap most IPPs struggle to cross.

Act II – The Turn

"The magician takes the ordinary something and makes it extraordinary."

Here's where an ordinary IPP becomes an extraordinary IPP with a great orchestration layer.

With trading licenses (e.g. BRP/BSP/CSP), your 200 MW solar portfolio now bids day ahead, trades intraday, provides voltage support and trades on local congestion markets. Your 50 MW battery delivers frequency restoration reserve with 4-second response, absorbs negative prices, and captures wholesale spreads in real-time

IPPs across Europe are making this exact transformation. They are all transitioning (part of) their portfolio to increasing levels of merchant exposure, with varying levels of in-house development. The rule of thumb? If you have a 200 GWh production portfolio or a 50 MW+ portfolio of batteries, it's worth going merchant with a small trading and sourcing team to define the trading strategies and solid tooling to support them in this effort. For portfolios in the same geography beyond 1 TWh, the level of autonomy of the trading resources is typically increased even more with active market roles and in-house optimisation logic

The transformation follows 4 distinct phases:

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The complete value stream builds on top of individual market value and you are derisked better against single market performance:

• Day‑ahead: €60 - 90/MWh* (ENTSO‑E, Eurelectric)
• Intraday: €80- 100/MWh* (ACER)
• Capacity markets: €40 - 60/MWh* (ACER)
• Congestion management: €100 - 200/MWh* (ENTSO‑E)
• aFRR balancing: €80 - 150/MWh* (ACER, ENTSO‑E)

* Revenues from markets are not foreseen as cumulative

Doing this all by yourself feels daunting, doesn’t it? Thankfully, this route to value doesn't necessarily require an 18-month build program, control room recruitment, building a trading desk, or juggling fragmented vendors. VPP platforms exist that handle the entire technical stack from 4-second data feeds and high-accuracy forecasting to direct market access, automated dispatch, trading automation and imbalance management. Complete architecture, proven and ready.

Act III – The Prestige

"You have to bring it back."

With your VPP solution and trading licenses, your solar panels look unchanged but their economics have changed drastically, with an uplift of €2 - 3M annually for your 200 MW portfolio, potentially boosting IRR by 1 to 2 percentage points based on typical financing (a quick back-of-the-envelope calc assuming €100M initial CAPEX and steady cash flows).

When the grids face frequency deviation, your batteries respond in 4 seconds. When solar surges and prices collapse, you trade the imbalance for profit. When evening demand peaks, you deliver at premium rates. When grid constraints emerge, you earn to ease congestion. Your trading team is managing your portfolio

Many start with a lightweight trading setup, heavily orchestrated by the automation of the VPP platform. This delivers the first solid increments to ROI and IRR right away. Over time, as confidence grows, a full-time trading desk takes over, fine-tuning strategies and keeping a close eye on the market. The result is a portfolio managed perfectly through seamless integration of your own trading logic and proven external tooling.

And if you are one of the forward-thinking IPPs in the market, the next evolution is already on the horizon: moving beyond merchant operations into retail, selling energy to end-consumers directly through supplier contracts.

The transformation is systematic and repeatable, with revenue models validated across hundreds of European portfolios.

You just need to see how the magic trick is done.

The curtain is up. Your move.

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Powernaut provides the VPP workspace that enables IPPs to become Merchant. Leading producers and retailers rely on Powernaut to transform their portfolios into multi-market revenue streams, bridging their internal trading strategies with flawless VPP execution. Book an intro to learn more.

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