Transitioning from developer to IPP: 4 practical tips

As the world transitions away from fossil fuels, global targets for renewable energy are becoming increasingly ambitious. Take Europe for example, where we need to double the share of renewable energy in the energy mix by 2030, compared to 2020 figures, in order to reach the 42.5% target in time. 

While this creates a huge opportunity for developers to propose and deliver new generation projects, it also means that renewable energy sites must become smarter and more efficient to deliver good ROI in highly competitive energy markets. 

One way to do this is by moving up the value chain. We see this trend with BESS suppliers, who now also deliver a BMS (battery management system) with their systems.

Renewable energy developers and asset owners can increase their revenue opportunities by taking matters into their own hands and becoming an Independent Power Producer (IPP).

What is the difference between a developer and an IPP? 

‍A renewable energy developer leads the development of renewable energy projects from inception to completion, and typically then sells the project to a third party IPP. The IPP takes over the ownership of the project and operates the generation assets. As such, an IPP owns and produces electricity but remains independent of the national or local electric utility.

4 tips to become a successful IPP

The transition from developer to IPP isn't necessarily the most easy to make. Unless you have help, that is. Here are our practical tips that will help you become a leading IPP in the renewable energy sector.

1. Diversify your portfolio by investing in a mix of renewable energy sources

Renewable energy is intermittent as it depends on the weather or natural resources to generate electricity. This means that the output of a renewable energy site varies day-to-day, especially as climate change continues to significantly impact weather patterns. 

As more companies become IPPs and new innovative technologies emerge, it’s quite possible that some renewable energy sources will deliver greater profits than others.  

‍“In 2023, IPPs generated approximately 1,850 terawatt-hours of electricity, one of the highest levels recorded. This represents a substantial increase from the early 2000s, indicating the growing importance of IPPs in the U.S. energy landscape” Source: Statista

To stay competitive, IPPs should adopt a portfolio diversification approach whereby you minimize risk by investing in several different renewable energy sources (RES). Naturally this also ensures geographical diversification as different RES are suited to different locations. 

Ørsted and HVC are good examples of IPPs with broad portfolios of generation technologies. 

By developing and/or investing in projects that use different RES, you can minimize investment risk and maintain your market position in both the short- and long-term. 

2. Optimize your operations and maintenance (O&M) costs

The profitability of renewable energy sites is heavily dependent on keeping operations and maintenance (O&M) expenses in check. O&M costs vary per generation technology but typically include costs associated with labor, downtime, replacement of parts or equipment, repair, other overheads such as insurance and more.  

Operations costs (OPEX) are far easier to manage if the operator has real-time visibility of generation assets and can then take actions to optimize the site’s operations. 

For example, the operator can closely monitor the asset health of equipment at their site and schedule crews to carry out preventative work well in advance of the equipment failing, minimizing the risk of downtime and avoiding emergency crew call-outs which are more costly.   

Maintenance costs can also be minimized by having greater visibility of the real-time condition of assets and how they are being used and aging over time. For example condition-based maintenance (CBM) enables the IPP to perform maintenance, replace parts, and make repairs based on the equipment’s actual health.

At most renewable energy sites, the generation equipment is connected to the Energy Management System (EMS) through the OEM-provided API. While this allows the operator to manage the equipment, these APIs are not built for aggregation of the large amounts of data available to truly monitor and optimize use of the renewable energy site. 

In one case we’ve seen a renewable energy owner lose 60% of their operational technology (OT) data when replying solely on the OEM-provided API to manage their generation. 

Platforms such as Helin can provide the bridge between your data sources at renewable energy generation sites and applications used by operators to monitor and control the operation of the generation. Helin easily integrates with the IPP’s existing EMS, streamlining the operator’s visibility and control into one platform. 

Helin’s Smart Grid Manager is a secure platform for managing the production and operation of your generation assets. 

Using platforms like this not only helps reduce O&M costs but also improves the generation site’s overall performances and avoids unnecessary downtime. 

3. Stay on top of government incentives and tax credits

The regulatory landscape for developers and IPPs is constantly evolving as governments and energy regulators continue to introduce new measures and incentives to encourage more renewable energy generation to be efficiently built, but to also ensure the market remains competitive and transparent. 

This provides both opportunities for IPPs to secure incentives, funding and other support, but also brings some compliance challenges. 

One such measure is ENTSO-E’s Requirement for Generators (RfG) that mandates all generation owners in the EU, who received their license on or after 1 January 2024, to be capable of exchanging information with the grid owner in real time or periodically with time stamping. 

This is called the real-time interface (RTI) requirement in the Netherlands. Sites that were active in 2023 will also fall into the scope of this in 2026. Helin’s Smart Grid Manager comes with a RTI, helping IPPs to easily comply and also optimize their production. 

Another measure is the Netherland’s SDE++ subsidy which protects IPPs against the unprofitable component of operating a renewable energy generation site and/or reducing carbon dioxide. The SDE++ subsidy application window opens periodically and successful applicants receive subsidies for a set period. 

Earlier this year the EU adopted a reformed electricity market regulation, introducing a range of measures to reshape the market. This included two-way contracts for difference (CfDs) which support investments in renewable energy generation by guaranteeing a minimum price for electricity but also setting a price cap to create more stable prices for consumers. 

The EU and local governments also often provide funding opportunities for renewable energy generation projects, typically for projects that use an innovative technology, business model or other approach, and also that will potentially benefit a large number of consumers. 

By keeping up to date with the latest regulation and initiatives at national and regional levels, you can ensure you are positioned to take advantage of any new opportunities to enter new markets, earn greater returns, secure funding, and remain compliant. 

4. Use advanced analytics to monitor production, trends and market conditions

In this competitive market, using advanced analytics and platforms like Helin enables you to outperform other IPPs by optimizing production, day-to-day operations, and maintenance. 

For example, Smart Grid Manager provides access to production data to help you increase your revenue by maximizing production when market prices are high, avoiding negative returns when prices are low, and keeping O&M costs under control (as mentioned in #2). 

Platforms like Helin integrate with your existing EMS and other systems to consolidate multiple data inputs in one streamlined interface. 

The largest solar energy company in The Netherlands, Sunrock, is already using Helin to create smarter solar farms. Sunrock is using our comprehensive and highly-secure middleware, Smart Grid Manager, to monitor and control their inverters and batteries based on their own energy strategy. This enables their operators to increase revenues by maximizing production and trading at spot market prices. 

Read more about how Helin collaborates with developers and IPPs to modernize their planning and operations systems and become an industry leader.

Bonus tip: build strategic partnerships with key stakeholders

Electricity grids are complex systems with a large ecosystem of stakeholders. Becoming an Independent Power Producer requires building and maintaining strong relationships with these key stakeholders, including: 

• Grid owners and operators: pro-actively engaging with the grid owner /operator will help negotiate a favorable connection agreement and foresee (and seek resolution to) any issues that may limit your output e.g. grid congestion. 
• Local communities: discussing your proposed new project or expansion with local communities in advance of submitting planning and starting construction work will help minimize the risk of planning objections.  
• Local smart grids: collaborating with nearby stakeholders in smart grids (such as commercial and industrial rooftop installations) to form strategic partnerships for distributing and consuming your green electricity. This creates a compelling business case for offtakers while ensuring steady income for the IPP. This can be taken a step further by integrating BESS to store excess energy and using flexible demand assets, such as freezing units, to help balance electricity production and consumption.

Key takeaways 

By adopting the four main approaches explained in this article, you can become a leading Independent Power Producer that: 

• Minimizes risk by having a diverse portfolio of generation assets 
• Optimizes its O&M costs 
• Take advantage of regulatory changes and also stay compliant
• Optimize its renewable energy production with a holistic platform

Getting started with Helin’s edge intelligence platform for IPPs

Are you transitioning from developer to IPP or are you already an IPP? Are you ready to optimize your returns and minimize your O&M costs with a secure edge intelligence platform? 

If so, you might want to consider implementing Helin’s industrial edge intelligence platform. Use the Smart Grid Manager to optimize production and operations of your renewable energy site. Turn your legacy assets into ‘smart’, secure and sustainable powerhouses.

Want to learn more? Make sure to get in touch for an introduction call to discuss the entire Helin platform, including the Smart Grid Manager module.