Article by
Paul Pontenagel
Over recent years, we have observed an influx of small- to medium-scale renewable energy asset owners looking to trade their production on Europe’s wholesale power markets. Conventionally, these parties have been outsourcing trading activities or participating only in the real-time balancing markets.
However, as subsidies for renewables are being phased out across Europe, and with balancing costs on the rise, many energy buyers are pricing in higher risk premiums, reducing the value of traditional long-term agreements.
To maintain profitability, a growing number of independent power producers (IPPs) are taking partial or full control of their short-term trading. This means taking on merchant risk – exposure to market fluctuations in the day-ahead, intraday, or balancing markets.
Bringing BRP functions in-house and taking over trading activities requires a fundamental transformation, both technologically and strategically.
In this article, we will discuss the key developments in the energy industry that are driving renewable asset owners and IPPs to build a trading setup in-house.
Thank you to the experts at Dexter Energy for their valuable insights on Trading-as-a-Service (TaaS) solutions and AI-based power forecasts, which are included further in this article.
As recently as a decade ago, establishing an energy trading desk required developing numerous systems in-house. In today’s landscape, defined by technological advancements and the need for up-to-date specialized systems, purchasing ready-to-use software has emerged as a way to sustainably enhance operational efficiency.
The only constant of the energy industry is that it is variable and ever-changing.
As technological innovation and dynamic regulatory landscapes continue to define the industry, we have observed the emergence of numerous specialized providers, who offer state-of-the-art trading, forecasting, and ETRM systems, and more.
Developing all systems required for an efficient and compliant setup in-house is still an approach favored by many large and corporate trading houses. However, the workforce required to develop, implement, and maintain these systems on the same level as a SaaS provider is far from sustainable for small-scale independent power producers.
This is where energy SaaS comes into play. With highly specialized teams, who stringently follow each new development and each new requirement, they can offer an agile setup and lowered risk exposure to their customers.
Ready-to-use solutions allow market participants to start trading on a new market very quickly. These solutions are optimized for the current market environment and comply with regulation, but they are not always optimal for every market participant’s trading strategy.
Bespoke systems offer the advantage of a fully-customized system that fits into your business and existing tech stack seamlessly, while leveraging a shorter development time, lower maintenance costs, and a minimal need for keeping up with regulatory and technological developments in-house.
The energy industry has witnessed an increasing need for highly specialized talent in parallel to recruitment challenges in many functions. This environment has led to the valuable development of expert firms, who can take care of niche and knowledge-heavy tasks.
Many energy projects, like Time2Market’s market access services, require intensive development for a few months, followed by minimal maintenance going forward. Recruiting a full-time team for short-term needs like these can lead to operational inefficiencies, additional costs, and underutilized employees.
This is one of the main advantages of outsourcing short-term projects that require a high level of expertise: Companies can quickly scale up and down as needed and be prepared for any development in the industry.
Maintaining up-to-date knowledge in an internal team is an ongoing challenge, which can be mitigated by working with an expert. Service providers specialize in staying ahead of industry developments. We work on building robust and long-term relationships with counterparties to ensure we are aware of every compliance shift and new regulation.
In the current landscape of outsourcing to build strategic partnerships and boost agility, these are our recommendations on when to build an in-house team:
· Are you working on a short-term project that requires specialized skills? Outsource to an expert service provider.
· Are you building a long-term function at the core of your business operations? Invest in an internal team.
· Do you have the resources to wait for the right team? If you’d like to start working on the project right away, outsource.
Artificial intelligence is revolutionizing the energy industry – from production to trading and physical delivery. AI enhances efficiency and allows for more accurate market forecasting due to its unique ability to handle large datasets.
Renewable energy markets are inherently more volatile than traditional markets. AI is especially beneficial here, as it can analyze vast amounts of real-time data and identify patterns and opportunities, which helps traders anticipate fluctuations in supply and demand.
The next step for many data-driven energy trading firms is the automated and quantitative approach. Otherwise known as algorithmic trading, these trading strategies are increasing common in markets with a large share of renewable production in the energy mix.
AI-driven or non-AI-driven bots can analyze market data, identify patterns, and execute trades automatically, following a predefined mathematical model. This level of automation mitigates many risks associated with human error and emotion, and ensures that traders can react to market changes instantly.
Our co-author in this article, Dexter Energy, is a specialized Trading as a Service (TaaS) provider that supports IPPs with confidently accessing short-term markets without the cost or complexity of developing trading infrastructure and algorithmic strategies from scratch.
Since 2017, the company has been helping renewable power producers across Europe maximize profits from their assets with AI-based power forecasts and trade optimization signals.
Let’s discuss the two essential components in Dexter Energy’s trading tech stack for independent power producers: Power forecasting and Flexibility with curtailment.
A power forecast predicts an asset’s output from a few minutes to a few days ahead. This forecast is used to submit bids in the day-ahead or intraday markets.
Traditional forecasting methods often fall short of capturing rapid weather fluctuations and may return insufficiently accurate predictions. AI, specifically machine learning, addresses this challenge by leveraging vast datasets, real-time weather inputs, and advanced modeling techniques to improve precision.
For example, Dexter Energy interprets 10+ weather models, including proprietary sources, and ingests terabytes of new weather data per day. They also store every historical forecast in full-gridded resolution using a custom, array-native solution.
Their model is posted to a modern, self-service API, which enables users to easily retrieve their latest forecasts.
Dexter’s approach has proven to reduce balancing costs by up to 35%.
Curtailment involves deliberately reducing production when market conditions make it financially advantageous. This could mean producing less than possible from a meteorological (e.g., wind speed, solar irradiance) or operational (e.g., availability) perspective. For instance, ramping down production in real time when imbalance prices go below your strike price. By actively managing their flexibility, IPPs can optimize revenues while minimizing exposure to imbalance penalties.
While trading flexibility with curtailment may seem complex at first, the process with Dexter Energy is straightforward. It starts with Dexter generating real-time steering signals based on imbalance price forecasts. These indicate when to ramp down or resume production for each 15-minute Program Time Unit (PTU).
The signals are then executed automatically via the asset’s Energy Management System (EMS) or SCADA system, either through in-house software or a steering partner. Afterward, the curtailed volumes are shared with the BRP, and all actions are reported back for settlement and analysis. The entire process is API-driven, enabling seamless integration and scalability.
We note that, beyond power forecasting and flexibility, some market participants engage in speculative or prop trading, taking advantage of price fluctuations for additional profit. This is an area Dexter Energy can support as well.
The last trend we will discuss in this article is the increased availability of advanced energy trading and risk management (ETRM) systems that are readily available by expert SaaS providers.
In short, these are comprehensive systems that provide functionality to manage the entire lifecycle of a trade and associated risk, including real-time data, automated trading tools, risk and portfolio management, settlement, reporting, and more.
The ETRM system providers we recommend are our trusted partners at Previse Systems, who was recently named Best Cloud-Based ETRM System at the Energy Risk Awards 2025, and Energy One, who is a global supplier of various software products and outsourced operations for the wholesale energy industry.
Trading energy on wholesale power markets has arguably never been easier for renewable asset owners and independent power producers. They can become licensed balance responsible parties (BRP) with the help of Time2Market’s highly specialized market access experts. A complete trading setup can be as simple as Previse Systems, Energy One, and Dexter Energy, who can tailor solutions to any entrant’s needs. The entire trading tech stack can be implemented while our specialists are managing the market entry procedure.
Without spending any resources on recruiting and training a team, or keeping up with regulatory and technological developments, renewable asset owners can be live with a ready-to-trade setup on any European market in 5 to 10 months.
Time2Market offers non-binding consultations to help you find out how we can accelerate your market entry case and take your energy trading desk to the next level.
Our bespoke solutions are always tailored to your priorities, current trading setup, and target markets. Find out what that means for the timeline of your next market entry ⬇️
Disclaimer: Time2Market ApS is not responsible for the completeness, accuracy, and actuality of the information provided. This article is intended for informational purposes only and should not be considered business or legal advice. The energy industry is extremely dynamic and counterparties change their requirements frequently. As a result, information discussed on this page is subject to change without notice.
This page has last been updated on
April 11, 2025
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