CurveBlock
Over the last decade subsidy regimes have shifted and merchant exposure has increased for many generators. Small-scale projects typically earn income from selling power into wholesale markets, contracting long-term offtake through PPAs to lock in prices, and participating in system balancing or ancillary service markets. National Grid ESO and market operators run the frameworks that allow aggregators to pool multiple small assets so they can access these markets more effectively than single small plants could on their own.
Balancing and flexibility markets provide additional value but bring operational complexity and price variability. Aggregators can bid portfolios into frequency response, reserve and balancing markets, smoothing revenue and reducing unit-level volatility. For projects without long-term contracts, merchant price risk is material; counterparty creditworthiness in PPAs is a central underwriting consideration.
Other practical factors influence economics: access to the grid, local constraints, and distribution network charges. Developers and owners therefore often combine revenue sources — a PPA for a base price, merchant sales for upside, and participation in flexibility markets via an aggregator — to manage risk while maximising revenue opportunities.
For retail investors in fractional shares of renewable assets, examining the revenue mix, presence of offtake contracts, and aggregator arrangements provides insight into likely cashflow stability and downside resilience.