For those who follow the VPP market closely, this is becoming increasingly evident: Virtual power plants (VPPs) have reached a point of maturity where they can no longer rely on simple, single-market tactics or rudimentary technology to run in the black. This fast-moving marketplace demands technology, regulatory frameworks, and business models. So, how can you ensure your VPP is continuously well-positioned to capture value rather than being outpaced by market shifts?
Successfully operating a VPP increasingly requires agility. The market is changing too fast for rigid business models and one-size-fits-all strategies. Operators need adaptable technology, a deep understanding of the latest TSO rules, and a clear view of the vendor market to remain competitive.
In the following articles, we’ll explore that in detail. Referencing the recent VPP Market Study, we’ll show how market players—from IPPs and project developers to aggregators—are turning concepts into commercially viable business models. We’ll also examine open-ended optimization, shifting grid requirements, vendor positioning, and our approach to building flexible VPP infrastructure.
Evidence that VPPs have moved well beyond the pilot phase is now quite visible. The recent VPP Market Study by ComTech shows growing momentum among IPPs (Independent Power Producers) and project developers who once considered flexibility an experimental add-on. Today, many see tangible profits from aggregated storage or ancillary services in active market operations. Industry experts like Jon Ferris of LCP Delta have discussed this shift at events such as Flexcon and E-world.
Why did this jump happen so quickly?
This was partly due to the underlying acceleration of the energy transition: Countries across Europe now mandate high shares of renewable generation and capacity markets that reward flexibility. The increased production of solar and wind power triggers volatility in supply, creating minute-by-minute opportunities for trading and balancing. On the demand side, electrification—from EVs to heat pumps—magnifies load fluctuations, which VPPs can leverage.
Market saturation and constant pivoting
The VPP Market Study points out that new ancillary products crop up regularly in Europe to address local constraints - like Germany’s push for large-scale battery projects or the Netherlands’ short-term congestion markets (GOPACS and ETPA). Each new product draws in eager flexibility providers, eventually saturates, and then providers pivot to the next. Meanwhile, intraday markets remain especially attractive for repeated arbitrage because daily price swings in wind- and solar-heavy markets are practically assured.
This cyclical saturation makes it difficult to bank on just one revenue stream. The more advanced approach is multi-market arbitrage, which involves switching between day-ahead, intraday, capacity auctions, or balancing services depending on which pays best at a given (quarter) hour. However, this is only practical if your software and operations are agile. Relying on static schedules or a single, inflexible aggregator platform simply leaves vital revenue on the table.
New entrants and shifting roles
Traditionally, utilities and large traders dominated short-term power markets. However, the study identifies a range of new market participants:
- IPP/Project Developers: Once purely owners of renewable sites, many now add co-located battery storage or sign up for aggregator/trading services (sometimes called “Trading-as-a-Service,” or TraaS)
- Behind-the-Meter Aggregators: These primarily focus on demand-side management for C&I or residential loads, increasingly bundling battery or EV-charging solutions
- Commercial and Industrial (C&I) Consumers: Driven by energy price volatility and the 2022–23 crisis, they look to hedge costs via direct market participation or third-party aggregator deals
Each group has unique needs, but they all share the same challenge: how to ramp up from a single-use case to a multi-market, multi-asset operation. This pushes them to adopt more sophisticated, often cloud-based solutions capable of real-time analytics and dispatch.
Software sophistication
Until recently, small or single-focus VPP operators relied on spreadsheets or lightweight, homegrown tools. But with multi-market participation of scaled-up numbers of assets, you suddenly need advanced forecasting, sub-hourly dispatch, automated settlement, and robust data management. The VPP Market Study underscores that aggregator solutions rapidly branch into analytics, data management, scheduling, and even short-term trading components.
Basic aggregator tools primarily focused on data collection and simple dispatch are evolving into more comprehensive solutions that integrate forecasting, multi-market bidding, and elements of ETRM functionality. However, the gap between aggregator software and full-fledged energy trading solutions remains significant. Not all vendors will bridge this gap successfully - some will specialize in narrower functions, while others may struggle with the complexity of broader integration. For VPP operators, the key is finding an all-in-one solution and ensuring an architecture flexible enough to integrate best-in-class modules, particularly for real-time optimization, without requiring a complete system overhaul.
Conversations at industry events
This view mirrors our observations; we've noted a shift in dialogue at conferences over the past couple of years. Prospects used to ask about minimal aggregator solutions that handle day-ahead scheduling for a handful of assets. Now, they want to coordinate dozens (up to thousands) of devices that might rotate through multiple revenue streams in a single day. They also bring up advanced risk management, data analytics, automated price forecasting, and TSO compliance. The difference is stark: the question is no longer “Can we do a small pilot?” but “How do we scale across multiple geographies and markets?”
Integration with trading and risk
While the primary impetus is short-term profitability, many advanced VPP operators realize they need at least partial integration with standard trading systems (ETRM) to manage hedges or forward positions. Many aggregator platforms aim to streamline trading and asset management, but industry feedback suggests gaps in middle- or back-office tasks. Meanwhile, some integrated vendors, including aggregator “full-scale” solutions, try to do everything - data management, trading, scheduling, settlement. This can work, but it’s risky if the design is rigid. A genuinely modular structure allows the aggregator part to communicate with existing ETRM solutions via robust APIs.
Looming agility
All these factors - market saturation, intraday volatility, new entrants, scaling complexity - converge to make agility the core challenge in VPPs. Agility here means:
- Technical flexibility: Your aggregator system can pivot quickly, whether adding new assets, integrating new optimization algorithms, or adapting to TSO data formats.
- Market adaptability: You can chase the best margin at any given hour, be it an ancillary service, day-ahead, or intraday.
- Regulatory readiness: If you shift into a new region, you can handle the TSO or DSO rules without rewriting your software from scratch.
Given these factors, the next step for a successful aggregator or IPP moving into multi-market territory is to reevaluate the software's foundation. A system that locks you into one approach or cannot swiftly integrate new algorithms for real-time bidding will likely hamper your profitability.
Looking ahead
As the market grows, more participants enter the fray. Intraday volatility, new ancillary services, and shifting TSO requirements favor those who can pivot quickly. Our five-part “VPP Agility” series will discuss how operators can keep up with these demands.
Suppose you want to see how to keep your core optimization logic open to upgrades and add-ons. In that case, our next installment will examine modular design and the rise of an “optimization marketplace” approach. Stay tuned!
