Unlocking Ancillary Services Revenue for Battery Storage in U.S. ISO/RTO Markets

As the demand for renewable energy increases, battery energy storage systems (BESS) are playing a vital role in ensuring electric system reliability and stability. One of the most significant ways for battery storage owners to maximize the value of their assets is by participating in the ancillary services markets. These markets, operated by the U.S. Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs), offer various revenue opportunities for BESS owners by providing essential services.

SYSO has significant expertise in each of these markets, revenue streams, registration processes, and live optimization of asset participation in these services over its lifecycle.

Ancillary services are critical to maintaining the balance between electricity supply and demand, ensuring that the electric system operates smoothly and efficiently. Battery storage systems can play a key role in these markets by providing services such as frequency regulation, spinning reserves, and voltage support. Participating in ancillary services markets allows battery storage owners to generate revenue beyond traditional energy arbitrage, effectively stacking multiple income streams.

For BESS owners, participating in ancillary services offers financial rewards while also contributing to overall system reliability. By using their ability to respond quickly to grid needs, batteries can capture revenue from different markets that require rapid dispatch or reserve power. This not only enhances the overall value of battery assets but also supports the integration of renewable energy into the electric grid.

Overview of Ancillary Services in U.S. ISO/RTO Markets 

Ancillary services in U.S. ISO/RTO markets provide several key opportunities for battery storage participation. These services generally fall into categories such as: 

• Regulation Services: Balancing short-term frequency fluctuations to maintain system stability.
• Spinning Reserves: Providing immediate power from resources already online to manage unexpected events or changes in demand.
• Non-Spinning Reserves: Delivering power within minutes from resources not currently running.
• Voltage Support: Ensuring consistent voltage levels across the transmission network.
• Black Start Services: Assisting in restarting the system after an outage.

Each ISO/RTO in the U.S. offers different versions of these services tailored to their regional needs. Let’s explore the ancillary service opportunities available in each major market.

In the PJM market, battery storage assets can participate in several ancillary services that help maintain system reliability. PJM offers co-optimized markets where energy and ancillary services are traded simultaneously. The main revenue opportunities for batteries in PJM come from:

Regulation Market: Batteries can participate in the regulation market, where they respond to changes in grid frequency by charging or discharging in real-time. This service helps maintain system balance and stability. Owners are compensated based on performance and response speed.

• Regulation A (RegA) is designed for traditional generation resources like steam turbines and other slower-response assets. These resources adjust their output to maintain grid frequency stability over longer periods.
• Regulation D (RegD) is intended for fast-responding assets like batteries. Batteries participating in RegD can quickly adjust their charge and discharge states, making them ideal for addressing rapid fluctuations in grid frequency and earning performance-based compensation.

Reserves Market: PJM offers both spinning (“synchronized”) and non-spinning (“non-synchronized” reserves. Batteries in the synchronized reserves market provide immediate power, while non-synchronized reserves require batteries to ramp up within 10 minutes to respond to system needs.

Secondary Reserves Market: The Secondary Reserves Market in PJM focuses on providing additional backup beyond the initial reserve responses. This includes resources that can provide power to manage longer-duration events or sustained system imbalances. Batteries participating in this market ensure that grid reliability is maintained during extended disturbances, providing a crucial backup layer to support system recovery.

ISO-NE Ancillary Services Revenue Opportunities

In the ISO New England (ISO-NE) market, battery storage can participate in a range of ancillary services designed to maintain system reliability. ISO-NE’s ancillary services include: 

Regulation Market: Similar to PJM, ISO-NE’s regulation market compensates battery storage systems for providing fast, accurate responses to frequency changes.

Reserves Market: ISO-NE also has both operating and non-synchronous reserves, where storage assets can earn revenue by providing immediate or near-immediate power when the system experiences unexpected outages.

Voltage Support: BESS can also contribute to voltage support services, ensuring that the transmission system maintains proper voltage levels during periods of high demand. 

Black Start Services: Batteries can participate in black start services, which are used to restart parts of the grid following a loss of power, making them critical to overall system recovery.

NYISO Ancillary Services Revenue Opportunities

The New York Independent System Operator (NYISO) offers a structured ancillary services market with several opportunities for battery storage systems to earn revenue:

Regulation Service: Batteries in NYISO can participate in frequency regulation by responding to changes in system conditions in real-time. This service requires fast response times and precise performance, which battery storage systems are ideally suited for.

Operating Reserves: NYISO offers both spinning and supplemental reserves. Batteries in these markets help ensure that power is available when it’s needed most, providing reserves that can be called upon during emergencies. 

Voltage Support and Black Start: NYISO also provides opportunities for batteries to participate in voltage support and black start services, offering critical backup and stabilization functions during grid disruptions.

MISO Ancillary Services Revenue Opportunities

In the Midcontinent Independent System Operator (MISO) market, ancillary services are co-optimized with energy markets, providing a streamlined opportunity for battery storage systems to participate. MISO offers three primary ancillary services:

Regulation: Battery storage systems provide regulation by adjusting output every four seconds, balancing the system, and helping maintain reliability.

Spinning and Supplemental Reserves: Batteries can participate in MISO’s spinning and supplemental reserves markets, where they are expected to deliver power within 10 minutes of dispatch to respond to emergencies.

With its co-optimized markets, MISO enables battery storage owners to maximize their revenue potential by offering energy and ancillary services simultaneously.

SPP Ancillary Services Revenue Opportunities

The Southwest Power Pool (SPP) provides three key ancillary services in which battery storage systems can participate:

Spinning Reserve: Batteries in SPP’s spinning reserve market provide immediate, ready-to-ramp power to address short-term system imbalances.

Supplemental Reserve: In the supplemental reserve market, batteries provide offline generation that can be brought online within minutes to ensure stability during emergencies.

Regulation Reserve: SPP’s regulation market compensates batteries for providing frequency regulation, a critical service for maintaining system reliability.

CAISO Ancillary Services Revenue Opportunities

In the California Independent System Operator (CAISO) market, storage systems can participate in several ancillary services that help integrate renewable energy and maintain overall system stability:

Regulation Up/Down: Batteries in CAISO can provide real-time regulation services, helping the system adjust to short-term frequency fluctuations. Regulation up provides revenue to battery asset owners for the ability to instantaneously dispatch electricity into the system for frequency regulation. Regulation down, on the other hand, compensates batteries for decreasing energy output or accepting charge to help stabilize the system.

Spinning and Non-Spinning Reserves: CAISO offers opportunities for batteries to provide both immediate and near-immediate power reserves, helping to address emergencies and supply-demand imbalances.

ERCOT Ancillary Services Revenue Opportunities 

The Electric Reliability Council of Texas (ERCOT) offers several ancillary services that allow battery storage systems to play a crucial role in maintaining system reliability. As the Texas grid faces growing challenges from increased demand and renewable energy integration, battery storage can capitalize on these ancillary services to generate revenue while providing essential support.

Regulation Services: ERCOT offers two key regulation services: Regulation Up and Regulation Down.

• Regulation Up: This service requires batteries to immediately increase generation output to manage frequency during periods of under-frequency or high demand. Batteries can quickly respond to these system fluctuations, ensuring frequency stability and earning revenue for fast and accurate performance.
• Regulation Down: In this service, batteries decrease generation output to help manage grid frequency when there is an over-supply of energy, preventing frequency from exceeding safe levels. Batteries that provide quick adjustments to lower output or accept charge are compensated for their response time and precision.

Responsive Reserve Service (RRS): Batteries in ERCOT can participate in the RRS market by providing quick-ramping reserve power that can be dispatched during emergencies or sudden spikes in demand. Batteries are ideally suited for RRS, as they can respond rapidly and help stabilize the grid when other resources might be slower to react.

ERCOT Contingency Reserve Service (ECRS): ECRS is designed for capacity that can respond within 10 minutes to address unexpected events, such as forecasting errors or the need to replace deployed reserves. Batteries can offer reserve capacity in this market, ensuring the electric system remains balanced when forecasted supply and demand do not align.

Non-Spinning Reserves: In ERCOT’s non-spinning reserves market, batteries provide power within 30 minutes of dispatch to replace offline generation or meet peak demand. This service helps ensure that there is always sufficient reserve capacity to respond to unexpected disruptions.

Unlocking the full revenue potential of battery storage assets requires a strategic approach to participating in ancillary services markets. By providing essential services such as frequency regulation, spinning reserves, and other ancillary services.  SYSO’s optimization strategies ensure all available revenue streams are incorporated into a battery storage systems optimization strategy and that we do not leave margin on the table.  

Whether you’re operating in PJM, ISO-NE, NYISO, MISO, SPP, CAISO, or ERCOT, each market offers unique opportunities for battery storage systems to optimize margin capture in ancillary services. Partnering with a knowledgeable market operator like SYSO can help you navigate these markets and optimize your participation, ensuring that your battery assets maximize their value while supporting the U.S. energy grid.

Ready to explore how your battery storage can participate in ancillary services? Contact our team today to learn more about unlocking these revenue streams for your asset.