For years, decentralized energy has been presented as a technological solution waiting for the right business model to catch up. However, many assets that look compelling on paper struggle to deliver predictable revenue once deployed. According to Aditi M. Tulpule, Founder and Director of 4D Energy Advisory, the real constraint comes down to regulation. “Technology moves at pace,” she says. “Most blockers sit in the gap between markets and regulation.”
In electricity markets, value is earned, not assumed. It comes from compliance with the rules that govern settlement, metering, and participation, and from structures that create predictability for investors and counterparties. Assets built around hypothetical future markets may attract interest or headlines, but without alignment to today’s regulatory and settlement frameworks, they struggle to generate revenue that lenders and investors can rely on.
Why Decentralized Assets Fail to Capture Value
The first mistake many asset owners make is assuming that market access automatically equates to market value. “Just because you have access to a certain market doesn’t mean you’re actually going to be able to monetize your asset well enough to secure a desired revenue stream,” she says.
In practice, revenue depends on granular factors such as settlement rules, metering configuration, and licensing boundaries. Real estate constraints and counterparty readiness also play a decisive role. Innovative models often rely on counterparties who’ve never transacted that way before, slowing negotiations and eroding returns. “It might look good on paper, but it’s not actually bringing anything in yet.”
This disconnect is particularly acute for early stage companies seeking investment. Projects may pass conceptual scrutiny but tend to fail bankability tests once regulatory assumptions are examined in detail. A single untested market position or misunderstood exemption can undermine an otherwise attractive proposition.
Designing for Markets That Exist Today
A recurring theme in Tulpule’s work is the danger of building assets for markets that don’t yet function at scale. Concepts such as peer-to-peer trading or perfectly stacked revenue streams are appealing, but they remain limited by current rules. “Decentralized assets are often designed around what could be monetized in theory rather than what you can actually derive value from today,” she says.
Electricity revenues are typically fragmented across multiple markets, and those markets can’t always be combined. Storage is a good example: participation rules, performance obligations, and derating methodologies can materially change the bankable revenue picture. Separately, long-duration storage is being supported through an LDES cap-and-floor regime with minimum duration eligibility requirements (8 hours), which is a different pathway from the Capacity Market. Paper models that assume perfect dispatch and flawless stacking ignore these constraints, leaving projects operationally fragile.
Tulpule emphasizes that understanding these limitations early allows developers to structure assets around realistic, defensible revenue rather than optimistic projections. Without that discipline, projects remain vulnerable to regulatory change and market volatility.
The Infrastructure Test
The transition to decentralized energy is also testing infrastructure that was never designed for two-way power flows. The legacy grid was built around centralized generation feeding demand in one direction. Today, distributed assets push electricity back up the network, often into constrained systems.
Tulpule points to the imbalance between generation and demand as a structural challenge. She points to a familiar example in the UK, where she’s spent 16 years working across the electricity system, from senior in-house roles at Ofgem and ELEXON to advising developers and investors today. Large volumes of wind generation sit in Scotland, while much of the demand is concentrated in southern England. Transmission capacity between the two is limited, creating physical bottlenecks that directly shape how and when assets can perform. Layered on top of that is a market structure that, for decades, rewarded generation rather than flexibility, even as intermittent renewables became dominant.
“You’re now having periods where consumers are being paid to use electricity,” Tulpule says. These dynamics reinforce the need for assets that are designed not just to generate, but to respond to the system’s needs within existing market frameworks.
Getting the Architecture Right Before It’s Too Late
If there’s one practical step Tulpule urges asset owners to take, it’s to fix the commercial and regulatory architecture before locking in physical design. “Once you’re off on that trajectory, it becomes impossible to bolt the compliance on later,” she says.
Decisions about metering points, asset boundaries, contracting models, and who holds license exemptions often have more impact on long-term revenue than marginal efficiency gains. Early clarity reduces friction, lowers regulatory risk, and can unlock revenue streams that would otherwise remain inaccessible.
Despite the sector’s technological sophistication, Tulpule reminds clients that utilities remain grounded in real estate. Land rights, lease duration, and investor-grade documentation can determine whether an asset can be financed or monetized over its intended lifespan. Ignoring these fundamentals limits optionality from the outset.
The Industry’s Inflection Point
Electricity markets are becoming as embedded in daily life as computing. Consumers, investors, and developers are all becoming active participants in its development. Recent moves toward half-hourly settlement in the UK illustrate how quickly this shift is accelerating. For the first time, domestic and smaller commercial consumers are being settled on a granular basis, meaning behavior such as when energy is consumed or deferred can directly influence market outcomes. Migration to market-wide half-hourly settlement began on 22 October 2025, with the programme targeting completion in May 2027. This creates tangible opportunities for flexibility, demand response, and decentralized assets that are designed to respond to price signals in real time, rather than relying on static generation models.
If projects are structured correctly, the benefits extend beyond investors to consumers and the wider system. “If we get it right, everyone benefits,” she says. “If we get it wrong, nobody does.”
Follow Aditi M. Tulpule on LinkedIn for more insights.
