Why Developers Are Shifting to IPP Models
Galileo's shift to IPP models reveals critical insights for developers and investors in the renewable energy space.
Sell at shovel-ready and move on. For years, that was the playbook for European renewable energy developers. Find the land, secure the permits, get the grid connection, then hand it off to an investor and do it again. The model worked — until it didn't.
Galileo, a pan-European clean energy developer founded in 2021, just commissioned its first owned project: a 3MW solar PV plant in Lombardy, Italy. Three megawatts is a modest start, but what it signals about where the money is actually flowing in European renewables right now is anything but small.
The Economics of Selling Early Have Changed
The early-stage development market in Europe isn't what it was in 2022 and 2023. Back then, investors were racing to build out renewable pipelines, and competition for pre-construction assets drove prices to levels that, in hindsight, weren't always justified.
"Investors created quite a high exposure with the acquisition of pipelines done in 2022 and 2023, and some of them burned their fingers by paying too high prices," says Ingmar Wilhelm, co-founder and CEO of Galileo.
The hangover from that period is now shaping how capital flows into the sector. Buyers are no longer paying a premium just for megawatts on a spreadsheet. They want to understand the specific projects — the grid connection quality, the permitting history, the local demand dynamics — and they want to understand the teams behind them. That's a fundamentally different due diligence posture than the pipeline-acquisition frenzy of a few years ago.
For developers, this creates a difficult choice. You can keep selling early-stage assets into a more skeptical market where value recognition has compressed, or you can hold longer, take on more capital risk, and capture the returns that come from owning and operating the project yourself. More and more developers are choosing the latter. Becoming an independent power producer — financing, building, and operating projects rather than flipping them — is increasingly where the business case points.
What Galileo's Transition Actually Tells Us
Galileo's shift wasn't reactive. Wilhelm is clear that the plan always included either selling projects or financing them once they reached sufficient maturity. The 3MW Italian project isn't a pivot so much as the first visible output of a strategy that was always heading in this direction.
But there's an important nuance here that's easy to miss. The company needed to sell projects first — to see those assets valued from a buyer's perspective — before it could confidently decide which ones to hold. That process of watching how another company underwrites your project teaches you things about your own development quality that no internal review can replicate.
Now Galileo sits on a large pipeline approaching the FID (final investment decision) stage across multiple European markets. The plan: build some, sell others, and assemble a generation portfolio that's deliberately designed to align with what buyers of power actually need — not just what's easiest to develop.
That distinction matters more than it might seem.
The PPA Market Is Forcing a Rethink
Across Europe's mature solar markets — Germany and Spain in particular — something structurally uncomfortable is happening. As more intermittent renewables come online, their generation increasingly peaks at the same times: sunny midday hours when wholesale prices are already falling, sometimes into negative territory. The more solar you add to a grid, the worse the economics become for every solar project already on it. This is the cannibalization problem, and it's not theoretical anymore.
Power purchase agreements, long the mechanism that gave renewable projects revenue certainty, are evolving in response. Corporates signing PPAs increasingly don't want a contract that delivers electricity only when the sun is shining or the wind is blowing. They want power when their facilities actually consume it — evenings, early mornings, cloudy days.
The PPA market is moving toward "green 24/7" supply contracts, where developers commit to delivering clean electricity around the clock, not just when conditions allow.
Wilhelm frames this as a question of market independence. If renewables can only work when governments mandate or subsidize their use, the energy transition stays fragile and politically exposed. But if developers can offer corporates the power profiles they actually want — dispatchable, clean, reliable — the demand becomes self-sustaining. The momentum comes from the market, not from policy.
The first of these deals are already being struck. IPP Zelestra recently secured two 24/7 solar-plus-storage PPAs in Spain, one covering a greenfield project and one adding battery storage to an existing solar site. These aren't pilot programs; they're a sign of what the commercial standard is becoming.
Why Battery Storage Changes the IPP Calculus
You can't build a credible 24/7 clean power offering without storage. That's the operational reality driving the integration of battery energy storage systems (BESS) into what were previously pure-play solar development portfolios.
For an independent power producer, storage isn't just a bolt-on. It's the mechanism that transforms an asset with a lumpy, weather-dependent output curve into something a corporate procurement team can actually sign a long-term contract against. It shifts the product from "solar electricity when available" to "clean electricity when needed."
Galileo is moving in exactly this direction. Wilhelm confirmed that the firm's next transactions will involve BESS portfolios across Spain, Poland, and Italy — some likely sold to other investors, others potentially financed and retained. Poland is particularly interesting here. It's a market where battery storage projects are not yet strongly supplied, which, in Wilhelm's framing, is precisely where value recognition remains at a good level. Early movers in underserved markets capture the margin that gets competed away once the market matures.
This is the insider logic that often gets glossed over in coverage of renewable energy M&A: the best returns don't come from being in the most established markets. They come from being early in markets that are on the credible path to maturity — and Poland's grid modernization trajectory puts it squarely in that category.
Where the Development Business Is Actually Headed
The shift from developer to independent power producer isn't just a business model preference. It reflects a structural evolution in how value is created and captured across the renewable energy lifecycle.
Early-stage development — securing land, permits, and grid connections — still matters enormously. Without developers doing that groundwork, there are no projects to finance or operate. But the premium that the market was paying for that work has normalized. The investors who overpaid for pipelines in 2022 and 2023 have recalibrated, and that recalibration is permanent, not cyclical.
The developers who thrive from here won't be the ones who develop the most projects. They'll be the ones who understand which projects to hold, which markets to enter before the competition arrives, and how to structure revenue contracts that serve what customers actually want — not just what's technically possible to generate.
Galileo's 3MW Italian plant is a small first step by any measure. But the logic behind it — own the asset, control the output, meet the customer where their real demand lives — is exactly the logic that's reshaping how capital flows through European clean energy. The developers who are still building to flip are competing for a shrinking margin. The ones building to own are positioning for what the market is becoming.
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