The Next-Gen IPP Playbook has been written by Luca Pedretti, COO and Co-Founder at Pexapark. This playbook serves as a hands-on guide for energy leaders, unpacking how IPPs are building the teams, systems, and strategies required to capture value, manage risk, and optimize revenues in modern power markets.

What You Will Learn:

Introduction: Why IPPs Matter

We have been captivated by Independent Power Producers (IPPs) for a long time.

At Pexapark, we have been working alongside IPPs since our founding eight years ago. We have supported them with price intelligence, enabled countless PPA and recently BESS transactions, and built analytics that guide their decision-making and reporting.

Personally, I have always been fascinated by the “Independent” in IPP. It represents both entrepreneurial freedom and a pioneering spirit. It was the IPPs that first introduced competition into what were once closed, monopolistic markets powered entirely by fossil fuels.

I began my career in the energy industry working on a first long-term PPA with an independent wind producer in Poland – a country that was then almost 100% coal-powered. Nearly 20 years later, IPPs remain at the forefront of the energy transition, driving it forward deal by deal.

IPPs are the pioneers – the good guys of the energy world!

And thanks to our daily work at Pexapark with so many IPPs, we have the privilege of seeing up close what’s happening in the market and how the industry is evolving.

When we published a LinkedIn post in May 2025 about the evolution of IPPs, the response was extraordinary – over 1,200 likes and 150,000 views. It clearly struck a chord, showing that the market is actively seeking clarity on what the next generation of IPPs might look like. That initial conversation has since evolved into interviews, a podcast series, and now this Next-Gen IPP Playbook.

Read the Post on LinkedIn >

With strong interest in the post, we recorded an interview with Mario Schirru, CEO of Encavis, one of the early leaders in the IPP space (full disclosure: Encavis was an early investor in Pexapark).
Like the LinkedIn post, the episode remains among the top three most-listed on the Pexapark Podcast.

Listen to the Podcast Episode >

The Next-Gen IPP Podcast Series

To better serve the growing interest in the evolution of the IPP space we decided to expand the conversation.

We were very fortunate to have the opportunity to interview eight senior leaders and executives from leading IPPs and investors with IPP structures.

Each guest was interviewed using the same set of questions as part of a special series on the Pexapark Podcast.

This playbook represents both our synthesis and thesis on the evolution of the IPP space – with a particular focus on the revenue side of the business.

What the IPP Leaders are Doing

Before diving into what today’s IPP leaders are doing, we first wanted to understand why nearly every developer and energy investor now aspires to become an IPP.

We identified three main drivers:

• Value capture: Value pools have shifted downstream – from generation to trading. There is now greater potential in optimizing and trading renewables and BESS assets.
• Market reality: Long-term, pay-as-produced PPAs no longer offer sufficient protection against capture rate erosion, cannibalization, or negative pricing.
• Strategic positioning: The IPP model has matured. It is no longer just about owning assets – it’s about managing revenues, risks, and flexibility.

For a long time, renewable energy IPPs managed to extended the so-called “invest-and-forget” business model. This model is based on securing long-term offtakes either from guaranteed offtakes or through PPAs. In the past, there were plenty of long-term PPA that could offload all risks in line with this business model. As noted, with demand saturation is some renewable dominated markets and the shrinking of green premiums, this model has started to wither away.

During the course of the interviews, a recurring theme quickly emerged: IPPs are evolving into customer-centric platforms with the aim of becoming able to shape, shift, and firm renewable output rather than simply generating it. All the IPPS we spoke with are working towards realizing multi-gigawatt, multi-technology, and multi-market portfolios.

From the asset investment side, this translates into a focus on adding BESS to the portfolio. As became clear from the interviews, from a capability perspective our observed IPPs are all about two things: (1) More structuring and pricing capabilities to master the next wave of deals (BESS and co-located projects) and, (2) Building up portfolio management capabilities as there is more value to be realized post-transaction.

Why is this the case?

First, simply having an origination team is not enough anymore. Deals are becoming more structured as there is much more value in the middle of the revenue stack (negative price risk, capture discounts, balancing, hedging costs can account for a massive share of the net cost to sell renewables against standard power market instruments – see illustration). Hence, IPPs are adding Structuring & Pricing capabilities.

Secondly, as more value moves as well post-transaction and portfolios become more operations-heavy (especially due to BESS), dedicated Portfolio Management teams are being created that can manage, optimize and trade with a focus on short-term operations. While the old IPP was light on operations, the new IPP actively dispatches, bids, and structures.

A further driver of this shift is the structural break between baseload prices and capture prices in renewable-heavy markets. IPPs can no longer rely on long-term revenue stability but must instead compete within standard power markets. This means the industry needs to develop products that can be valued and traded with conventional market instruments. This requires a new commercial mindset, where structuring, short-term positioning, and portfolio hedging are treated as essential disciplines, not add-ons.

Top Priorities for Today’s IPP Executives

In short, the next generation of IPPs are no longer passive asset holders. They are becoming active energy managers, equipped with the data, teams, and structure needed to extract more value, manage volatility, and deliver tailored solutions to offtakers.

Some described the new emerging setup as a “virtual utility” or “utility light” model, reflecting the greater optionality IPPs must manage across technologies and geographies but also in terms of complexity in operations. Many of the interview partners underlined that at the heart of the new IPP is a “revenue brain” , that is a set of people, processes, and systems fully dedicated to maximizing revenues and managing risks across the portfolio.

To set a boundary to the IPP category, we have utilities with an ability to operate at a much larger scale market wise, offering a comprehensive suite of energy services that includes wholesale market optimization, energy sales to mid-size and SME customers, retail, proprietary trading, and intermediation.

This is also the reason why we, at Pexapark, believe IPPs will dominate BESS and co-location projects, but utilities are best positioned to arrange carbon-free energy (CFE) deals such as the recent ones announced by Google and Shell in Great Britain. It takes a significant leap in capabilities (and balance sheets) to be able to orchestrate a larger fleet of generation, capacity, and demand.

Whatever we choose to call it – Virtual Utility, Utility Light – the IPP as we know it has undeniably evolved. We simply prefer to call it the Next-Generation IPP.

The New Commercial Stack

A few years ago, the commercial stack of an IPP often consisted of a single originator and an Excel file to keep track of contracts (an oversimplification of course, but the truth is not that far off). Since then, the commercial setup of leading IPPs has evolved so dramatically that it’s hardly recognizable compared to those humble beginnings!

The modern commercial stack of IPPs, brings together a layered set of front-office commercial activities, supported by middle-office oversight and governance, and further reinforced by a robust back office and IT infrastructure to ensure everything runs smoothly.

Now we will explore the full emerging commercial stack in detail.

The Front Office

The IPP Front Office drives revenue growth, manages revenue exposure and ensures revenue optimization. The Front Office needs to specialize both along the various revenue streams (electricity, GoO, capacity and grid markets) and along delivery tenors: from long term PPAs to mid-term hedges, to short-term optimization, down to intra-day optimization.

While often not existing in name, so called Middle Offices are increasingly emerging in function, with the task of ensuring that all commercial activities are conducted within acceptable risk parameters, while also providing actionable insights to optimize performance and maintain compliance. Their work focuses heavily on analytics, independent verification, and benchmarking.

Finally, while the laurels are often claimed by the Front Office, modern IPPs could not function without their Back Office. Its role is to ensure operational efficiency, financial accuracy, and regulatory compliance, acting as the backbone for Front and Middle Office activities. This work is largely driven by IT, energy data management, and contract management, which together underpin all investment and revenue management processes.

What does the modern IPP Front Office look like?

At the core of the Front Office are two commercial engines, often described through the “Spotter and Sniper” model:

• • Origination desks build trust and generate demand, creating the pipeline of long-term buyers and partners. They are the “snipers”, identifying and securing opportunities.

 

• Structuring & Pricing desks handle the heavy lifting of structuring transactions and developing detailed pricing, ensuring that commercial terms are competitive, bankable, and value-accretive.

With value increasingly shifting toward optimization and trading, structuring and pricing capabilities have become truly mission-critical. Plain vanilla pay-as- produced PPAs are now rare. The market has moved decisively toward more complex structured deals and BESS offtakes. As Ivan from Zelestra noted, “I don’t see how to survive in today’s industry without this commercial structuring team.”

As a result, there is significant investment going into the professionalization of the two core engines – Origination and Structuring & Pricing – including larger teams, better tooling, and stronger support. More often than not, this boils down to equipping teams with the specialist data sets required to price deals accurately. The role has expanded far beyond traditional “PPA negotiations”.

While the foundational disciplines of relationship-building and securing access to deal flow remain essential, the trend is clearly moving away from simple PPAs toward more tailored energy products – shorter tenors, shaped products, hybrid PPAs, or offtakes with embedded options (all those floor structures!)

In parallel, most commercial teams now benefit from dedicated market analysis and strategy support. Increasingly, IPP leaders are also considering dedicated sales and business development functions to support origination with customer acquisition, new product development, and partnerships.

Around this strengthened core, the Front Office has expanded into new specialized disciplines broadly aligned with delivery tenor and the growing complexity of revenue streams:

• Short-term bidding and physical dispatch have become highly specialized crafts. The rise of batteries has amplified this need, requiring desks capable of real-time optimization and participation in ancillary service markets . Some IPPs build these capabilities in-house once they reach around 0.5-1 GW of operating assets; others partner with utilities and traders. But in every case, investment is flowing into capabilities – not only for execution, but also to enable IPPs to guide and direct these activities strategically.
• Portfolio management and “green” desks take a broader view across technologies and markets, managing multi-asset positions while monetizing renewable certificates. Portfolio management is becoming increasingly important as asset bases grow and become more complex. This includes balancing and dispatch – managing physical delivery and grid-balancing obligations – and organizing the route-to-market, meaning the selection and management of optimal sales channels, whether through intermediaries, direct contracts, or auctions.

The Middle Office

If the Front Office takes the spotlight, the Middle Office works just behind the curtain – quietly but critically ensuring that commercial ambitions are executed within robust governance and risk frameworks.

While few IPPs have a formally named ”Middle Office”, nearly all have built the function in practice. These emerging teams perform the vital role of guardrails: protecting value, validating decisions, and enabling data-driven performance management.

At its core, the Middle Office provides independent oversight, especially around pricing, risk, and performance verification. This may seem mundane, but as revenue structures become more complex – and as optimization and trading activities grow in contribution – the need for a strong, impartial control layer becomes non-negotiable. The Front Office simply cannot be left to operate alone when exposures span volatile markets, intricate payoffs, and multi-layered optionality.

Although organizational structures vary widely from one IPP to another, the underlying capabilities being developed are surprisingly consistent. In practice, Middle Office functions tend to coalesce around four broad pillars:

At the core of the Front Office are two commercial engines, often described through the “Spotter and Sniper” model:

• Risk Management
  Risk Management is responsible for monitoring and controlling exposure across the core risk dimensions: price, volume, capture, and balancing. Just as importantly, credit risk – a relatively new discipline for many IPPs – is becoming essential as counterparties diversify and deal structures lengthen. A key evolution underway is the shift from assessing risk at the level of individual assets to understanding portfolio-level revenue dynamics, correlations, and tail exposures. This portfolio lens is crucial for decision-making, hedging, and capital allocation.
• Portfolio Analytics
  Often embedded within or closely aligned to Risk Management, Portfolio Analytics focuses on evaluating revenue performance and value at the portfolio level, rather than through simple aggregation of standalone assets. Crucially, this function provides independent pricing oversight – validating and challenging valuations, structures, and assumptions produced by the Front Office. This independent verification has become one of the defining changes in how modern IPPs operate, ensuring discipline, comparability, and transparency across all commercial activities.
• Market Data and Curves Management
  Many IPPs still rely on long-term fundamental curves used at the investment decision stage. However, these curves are insufficient for portfolio management, short-term optimization, or accurate pricing of PPAs and BESS offtakes. As a result, Middle Offices now maintain market-based forward capture curves for each market and technology, often complemented by hybrid/blended curves that merge market data for the near term with fundamental views on the long end. The industry’s need for high-quality, granular data has exploded – spanning short-term power markets, ancillary services, shape products, batteries, and complex PPA structures.
• Benchmarking & Independent Price Verification
  To provide credible valuation authority across the organization, Middle Offices increasingly implement structured benchmarking of pricing inputs and curves – often referred to as Independent Price Verification (IPV). By participating in price surveys for illiquid or emerging products – such as BESS tolling structured offtakes or long-term PPAs – Middle Offices gain visibility into transactional price ranges. This benchmarking discipline reinforces pricing accuracy, supports governance, and builds confidence with boards, investors, and auditors.

As IPPs continue to mature, the Middle Office is likely to become a formal and authoritative function, responsible for setting internal valuation curves, pricing parameters, and risk methodologies. And this evolution is long overdue. Error margins are widening as more value shifts downstream – where the gap between baseload and realized prices can reach up to 60% once capture effects, price volatility, and balancing costs are accounted for. In this environment, a CFO needs an independent voice to challenge the Front Office when it prices an offtake and declares “this is a good deal”.

One of the most significant organizational changes that accompanies the formalization of Middle Office is a shift in reporting lines away from the Front Office, reinforcing its role as an impartial control and valuation function rather than an extension of commercial operations.

Another critical responsibility is the independent validation of deal captures made by the Front Office. Errors in translating commercial terms – especially for complex or large deals – can have severe and long-lasting financial consequences. A missing exercise window, a mis-specified option, or an incorrect termination date can materially erode value throughout the life of the agreement. Middle Office checks ensure that deal data is captured accurately, consistently, and in a way that can be operationalized by the rest of the organization.

The Back Office

While its name may already lack the glamours of the Front Office, today’s commercial organizations would simply not function without the years of investment that have gone into building modern Back Office capabilities – particularly in the digitalization of operations.

The Back Office provides the data infrastructure that makes all energy and asset information accessible for revenue and asset management. Across nearly every IPP, establishing control over data has been the single biggest priority. This has led to the widespread creation of data lakes: centralized repositories that store large volumes of raw data in their native format.

The senior leaders we interviewed consistently described this as one of the most difficult, time-consuming, and ongoing undertakings – not only because of the initial investment, but because maintaining data quality is a continuous discipline. And yet, everything else depends on it.

With the data foundation in place, Back Offices deliver robust contract management, ensuring that complex offtake agreements, market interactions, and settlement processes are executed and monitored correctly. As IPPs move toward “next-generation” commercial models, the Back Office is handling an expanding universe of data, more numerous contracts, and increasingly demanding reporting requirements.

For short-term operational activities, many IPPs rely on ETRM systems (Energy Trading and Risk Management systems) to track positions, model portfolio scenarios, and monitor fair value and revenue-at-risk. Given the unique characteristics of renewable assets – non-firm production, capture risk, shape variability, and bespoke contract logics – many companies depend on bespoke systems such as Pexapark’s platform or tailor-made in-house solutions.

The Key Capabilities of the Commercial Stack Defined

The Asset Stack

While we’ve focused on how next-gen IPPs have been evolving from a revenue point of view, the asset side is undergoing equally important shifts. Most visible is the acceleration of investment into battery energy storage systems (BESS), now seen as a core driver of flexibility and value.

Particularly striking is how important technical asset management remains. Far from being a basic requirement, it is still a strategic capability. As markets demand more controllable, dispatchable, and responsive assets, portfolios must now be designed from the market backwards – ensuring plants can be regulated, ramped, and optimized in real time. And this applies not only to BESS, but also to our “good old” wind farms and solar plants.

If we sketch the asset stack of the next-gen IPP, it includes:

• • Multi-market exposure to diversify market and price risk
  • Multi-renewable portfolios, blending wind and solar, increasingly co-located with storage
  • Storage integration – both stand-alone and co-located – as a foundational source of flexibility and risk mitigation
  • Critical operating scale of at least 1-2 GW, enabling dedicated in-house capabilities
  • Market-informed design, as practiced by Nuveen and Eurowind, with flexibility and controllability engineered into assets from the outset

In essence, the asset stack is not just about scale alone. It is about building portfolios that are both technically agile and commercially aligned – supporting IPPs to compete as active market participants rather than passive generators.

Frontiers of the Next-Gen IPP

Innovation continues to reshape the independent power producer landscape, and our discussions with industry leaders revealed several emerging frontiers.

Some surfaced directly in the interviews; others are critical themes gaining importance as competition with utilities intensifies. Together, they highlight the capabilities that will define the IPP market for the next decade.

Six themes stand out:

1. Bespoke services, including 24/7 green energy
2. Shorter tenors, increasingly below seven years
3. Portfolio-level hedging and financing
4. Retail partnerships and direct sales models
5. Credit management as a strategic capability
6. Customer centricity

While full 24/7 green delivery remains aspirational for most IPPs, the direction of travel is clear. The priority is building BESS capacity and mastering the next generation of offtake structures – flexibility purchase agreements, hybrid PPAs, and shorter or more complex contracts (e.g. with negative-price clauses). True 24/7 service will likely remain the domain of large utilities with deep trading organizations. However, as one IPP leader put it, the true objective is not perfection but developing long-term revenue management that enables tailored customer solutions within standard market products.

On tenors, seven years appears to be the minimum to secure project financing, though leaders agree that achieving genuinely bankable long-term revenue requires significant additional effort. Availability of competitively priced long-term PPAs remains limited, with flexibility emerging mainly for mature portfolios that have already exited initial support schemes. This trend is accelerating as more assets roll off subsidies and can be managed freely in the market.

A strategic avenue that did not explicitly surface in interviews is partnering with retail energy providers or adopting direct sales models to engage end-consumers directly. In less liquid markets, this strategy can secure stickier offtake. Such partnerships – or a small in-house sales force focused on SME-sized volumes (5–10 GWh) – could allow IPPs to capture more value and build closer customer relationships. From a structuring, pricing, and revenue-management perspective, this is a natural extension of existing capabilities. With the surge in activity across energy management, credit management is becoming equally decisive. Market risks do not disappear – they merely convert into credit risks. Securing appropriate credit lines and maintaining strong counterparty relationships is essential for reliable market access, especially under stress. In turbulent periods, robust credit frameworks underpin operational continuity.

Finally, customer orientation is moving to the centre. Offtakers increasingly expect services, not just megawatt-hours. The next generation of IPPs will focus on enabling flexibility for both buyers and the grid, pushing IPPs toward a more solution-driven commercial model.

Where IPP Leaders Differ in Practice

Our interviews revealed meaningful differences in how IPPs approach market participation and operational execution. The biggest divides relate to the maturity of short-term physical trading desks, the sophistication of optimization capabilities, and whether revenue management is treated as a true executive-level function.

Interestingly, with one exception, no company has opted to build a fully customized in-house energy risk management system. Most rely on established platforms and specialist external tools – a contrast to the early renewables tech wave, when many large players initially attempted to build technical asset management solutions themselves.

Consolidation is already unfolding, reflecting the reality that not all IPPs can sustain the scale required for long-term competitiveness. As one interviewee noted, there is unlikely to be room for “50 large IPPs”. Only those with strategic positioning, operational sophistication, and strong risk capabilities are likely to emerge as long-term winners.

The Call to Build the Next-Gen IPP

As the leaders we interviewed made clear – and as this playbook summarizes – the transformation of the IPP model is no longer theoretical. It is happening now, across markets and across organizations. The next generation of IPPs is emerging.
These companies will be defined not just by the assets they own, but by their ability to manage, structure, and optimize revenues. They will operate as orchestrators of value across multiple markets and time horizons. Their currency will be megawatt-hours, not megawatts.

The frontier for IPPs is clear:

• Be revenue managers, not just asset managers.
• Build the commercial stack early – before scale outruns capability.
• Invest in structuring, pricing, and portfolio management equal to market sophistication.
• Create an edge through systems: Data discipline, risk governance, and strong digital foundations.

All of this must happen before utilities, trading houses, and BESS optimizers capture the optimization margin, leaving IPPs as low-value generators squeezed by more aggressive intermediaries.

The winners will not be the biggest, but the most commercially excellent. At Pexapark, we expect this shift to materialize first in a new wave of deals. Whereas revenue once centered on PPAs, the focus is now on structured offtake arrangements and the integration of new asset classes such as BESS.

Our mission remains unchanged: to make clean energy markets more efficient by providing price intelligence across every phase of the transaction. We equip IPPs with the insights, tools, and analytics they need to compete – and win – in open power markets.

Accelerate Your IPP Journey

Every IPP eventually reaches an inflection point where scaling is no longer just about adding megawatts. It calls for a stronger commercial architecture built on disciplined data, actionable analytics, and a framework that turns volatility into control and complexity into strategic advantage.

How Pexapark Helps IPPs

Built on years of supporting prominent IPPs through this exact evolution, we’ve designed the Pexapark IPP Package. It brings together Pexapark’s independent price intelligence, expert execution, and deep market intelligence – trusted by leading IPPs across Europe – to help you scale with confidence.

The Pexapark IPP Package unlocks a twelve- to eighteen-month acceleration curve, enabling you to operate as a truly next-gen IPP with a future-ready commercial foundation. Our package consists of four core pillars – the PEXA of the modern IPP stack:

Contact us to discuss how the Pexapark IPP Package can support your next stage of growth.