Evolving renewable power market and its software requirements

I had not looked at the VPP market since completing my VPP market study in 2024, so I decided to revisit the topic.

Although the focus of policymakers has shifted somewhat from energy transition toward defense and other geopolitical issues, the green transition is continuing. The emphasis is increasingly on improving the flexibility of the energy systems and developing the grid infrastructure needed to support it.

I wanted to understand how modern software solutions for emerging market participants – such as IPPs and aggregators –  are evolving and discussed this with Johann Zamboni from Xtra-energy. Xtra-energy is a startup providing a platform for emerging energy market participants. The platform is designed as a flexible portfolio management solution for multi-site renewable producers and other organizations managing portfolios consisting of multiple assets, complex contract structures, and exchange activities.

Johann confirmed that their target market – aggregators, IPPs, and retail companies – is continuing to grow. The three main groups are essentially the same as those identified over the past two to three years, but they are developing at different rates.

• IPPs with their own exchange trading are growing steadily, but relatively slowly. This group typically requires ETRM solutions with a strong focus on physical trading and short-term markets.
• IPPs accessing the market through third parties represent the most dynamic group and are experiencing strong growth. These companies need portfolio management solutions with less emphasis on trading, but with support for both short- and long-term contracts, position management, bidding, and asset management.
• Smaller IPPs with simple contracts structure and no exposure to markets require mainly asset management capabilities.

This market structure was described in the VPP report and has remained broadly unchanged over the past two years. But have the requirements for software solutions changed? Clearly, yes.

The asset mix increasingly includes not only renewable generation but also batteries, which introduce their own requirements for analytics and optimization. Ancillary service markets are emerging as an increasingly important component alongside wholesale markets. Contract structures remain complex, combining long-term agreements – such as PPAs and FPAs – with short-term contracts across day-ahead, intraday auctions, intraday continuous trading, balancing markets, and various ancillary services (FCR, aFRR, mFRR, etc.).

Software solutions therefore need to support both bidding and contract management across these markets. Cross-market optimization, battery analytics, basic risk management, and algorithmic trading add further layers of complexity. As a result, the requirements increasingly go beyond the capabilities of many traditional ETRM solutions.

Xtra-energy focuses primarily on the requirements of the first and the second group, supporting processes ranging from contract management,  auction for bidding on intraday, day ahead and ancillary service market to asset steering, position management, and basic risk management. Algorithmic trading and optimization are provided through partner solutions.

Over the past year, the company’s development efforts have focused on capacity bidding for ancillary services, analytics including M2M, P&L, exposure, and Revenue at Risk calculations and the use of AI to improve the user experience.

For example, when a company expands its business by creating a new project or adding a new renewable site, an AI-driven assistant can guide the user through the steps required to create and configure the new asset in the system.

In conclusion, the requirements of companies such as IPPs, project developers, aggregators, and retailers are becoming increasingly complex. Their software needs to combine capabilities that we traditionally associate with ETRM systems with requirements related to asset management and short-term trading.

At the same time, companies in this market are generally not large enough to maintain extensive ecosystems of specialized tools that require significant integration. Their integration requirements are nevertheless already complex because they need to connect to SCADA systems in order to monitor and steer their assets. The variety of SCADA systems and communication protocols is very high, creating a significant challenge for software providers.

Xtra-energy, for example, does not connect directly to SCADA systems but uses third-party platforms as an intermediary. Johann explained that this approach still presents challenges. Signals from different markets – e.g. intraday, day-ahead, and ancillary services – are supported by different devices and can compete. A centralized coordination is needed to dispatch the asset correctly. This creates a need for greater centralization of asset-steering and dispatch functions, particularly as assets participate simultaneously in multiple markets.

The IPP and aggregators market increasingly demands a new generation of portfolio / asset management solutions that support multi-market bidding, contract management, specialized analytics, and asset steering, without creating unnecessary complex IT landscape.

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