Renewable energy has become the epicenter of infrastructure investment. But as the sector matures, one theme keeps emerging in boardrooms and investment committees alike: margin compression.
Our Co-Founder and COO, Luca Pedretti, sat down with Itamar Orlandi, Director of Commercial Strategy & Insight, for a deep dive into what’s really driving the numbers and what that means for investors looking to safeguard their returns.
Spoiler alert: it’s not just about owning more gigawatts.
Over the past few years, the renewables sector has seen an unprecedented inflow of capital. That’s great news for the energy transition, but it also creates a race to the middle on returns. With so many players chasing similar assets, especially in solar, the competition has bid away much of the early-mover margin.
As Itamar put it, the market has shifted – from one where scale and asset access were enough, to one where success now hinges on market intelligence and sharp commercial execution.
Traditionally, many investors treated renewable assets like infrastructure: build, sign a long-term fixed PPA, and collect the yield. That model still exists, but it’s no longer the industry standard.
Today, the most successful investors are actively managing risk and revenue. This means:
Offtake strategy is no longer a procurement task. It’s a core lever of value creation.
Owning a large fleet of assets should deliver benefits through operational synergies and financing efficiencies. But in a world of merchant exposure, scale without insight can quickly become a liability.
Itamar noted that even with 2GW in your portfolio, selling power into the market without a clear understanding of basis risk or price cannibalization means you’re likely leaving value on the table.
The sharpest players combine size with an internal commercial muscle: pricing tools, market analytics, and teams that can respond to market shifts – not after the fact, but in real time.
Policy risk used to be about feed-in tariffs. Today, it’s about market design: grid access, imbalance pricing, dispatch constraints, and clean energy accounting (think 24/7 CFE). All of these affect how revenue is realized and how risk is distributed.
Those who can quantify and position for optionality for example, optimizing dispatch or co-locating storage, will be in a much stronger place than those who simply react.
So what should forward-thinking investors do?
In a compressed margin world, the edge doesn’t come from owning the biggest pipeline. It comes from understanding how to monetize it smartly.
As Itamar observed, what we’re seeing now is the rise of the next-gen IPP – one that blends strong execution with a trader’s mindset and a data-rich operating model.
This is where the future of renewables investment lies and it’s a future we at Pexapark are excited to help shape.
>> Listen to the full conversation with Itamar Orlandi here.
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