Ancillary services are the support functions that keep the power system stable, balanced, and reliable by keeping electricity flowing across the system. They are critical to real-time grid operations, especially as more variable renewable sources like wind and solar come online. ISOs and RTOs manage ancillary services markets and pay resources for providing these services, which include frequency regulation, spinning reserves, non-spinning reserves, and voltage control.

Ancillaries are categorized into several types based on their function. Each type supports system reliability by managing different operational requirements, from immediate demand fluctuations to longer-term voltage stability. Market participants, including battery storage, renewable generators, and traditional power plants, can participate in these markets to earn revenue while contributing to system stability.

Key Ancillary Services

Frequency Regulation: Frequency regulation is the process of keeping the grid’s frequency within a narrow band (e.g. 60 Hz in the US). Frequency fluctuations occur when there is a mismatch between supply and demand, which can destabilize the grid if not corrected quickly. Resources providing frequency regulation can increase or decrease output as needed to keep frequency stable. Battery storage, with its fast response capability, is well suited for this role as it can react to frequency changes in seconds, charging or discharging to counteract the fluctuations.

Spinning Reserves: Spinning reserves are extra generating capacity that is already synchronized with the grid and can start providing power immediately on request. These reserves are critical for responding to sudden outages or unexpected demand spikes. Battery storage assets can participate in spinning reserves by being in a ready state and providing near-instantaneous power when needed.

Non-Spinning Reserves: Non-spinning reserves are capacity resources that are not generating but can be brought online quickly, usually within 10 minutes. Unlike spinning reserves, non-spinning reserves do not have to be synchronized with the grid at all times. These reserves are for situations where extra capacity is needed over a slightly longer response time. Some renewable resources and storage assets can participate in non-spinning reserves, providing flexibility and backup power when needed.

Voltage Control: Voltage control, also known as reactive power support, keeps the voltage levels across the transmission and distribution system stable. Stable voltage is critical to prevent equipment damage and efficient power flow. Traditional generators often provide voltage support with reactive power capability, but storage assets, especially those with advanced inverter technology, can also contribute.

Black Start Capability: Black start is the process of bringing the grid back online after a total system shutdown. Resources with black start capability can start independently of the grid and gradually increase their capacity online. Traditional generators often provide black start, but with advancements in storage technology, batteries may soon play a bigger role in black start operations, especially as more renewable assets come online.

Why Ancillaries are Important for System Reliability

Ancillaries are critical in electric systems with high renewable penetration. As renewables fluctuate based on weather, ancillaries help grid operators balance supply and demand in real-time to prevent frequency and voltage instability. Battery storage, which can switch between charging and discharging modes quickly, is well suited to provide multiple ancillaries simultaneously, especially in frequency regulation and spinning reserves markets.

As the energy mix transitions to renewables, ancillaries also help reduce curtailment or the process of limiting renewable output due to grid constraints. By absorbing excess renewable generation, especially during low-demand periods, batteries and demand response assets participating in ancillaries can reduce curtailment and make renewable energy integration more efficient.

Revenue Opportunities for Battery Storage in Ancillaries

Battery storage has a competitive edge in ancillaries due to its fast response times and flexibility. By participating in ancillaries, battery storage providers can earn revenue from multiple sources and add an extra income stream on top of energy market earnings. Common revenue opportunities for storage in ancillaries include:

Frequency Regulation Payments: In frequency regulation markets, battery storage earns payment based on its ability to respond to real-time frequency deviations. Payment structures vary by ISO/RTO, but they typically include performance-based payment that rewards assets for accurate and fast response. Frequency regulation is one of the highest revenue opportunities for battery storage, especially in regions like PJM and CAISO, where demand for fast-responding resources is high.

Reserve Market Payments: Battery storage assets can also participate in spinning and non-spinning reserves, providing capacity that grid operators can call upon during emergencies or peak demand periods. Reserve markets provide a steady revenue stream as battery storage assets are paid for their availability and readiness to deliver power.

Reactive Power Compensation: In some markets, battery storage providers may also get paid for reactive power support, which is critical for voltage control. Reactive power markets are less common than regulation or reserves but are an emerging revenue stream as advanced inverter technology becomes more widespread in storage systems.

Black Start Services: Although relatively rare, black start capability is another revenue opportunity for battery storage as technology advances. Grid operators may pay assets with black start capability as a contingency for system recovery. As storage technology improves the demand for flexible black start resources could increase and open up a new ancillary service market for batteries.

Challenges and Considerations in Ancillaries for Battery Storage 

Ancillaries offer revenue opportunities but also operational challenges and requirements:

Performance and Compliance Requirements: Battery storage assets participating in ancillaries must meet exact performance requirements, including fast response times and precise energy dispatch. ISOs and RTOs have strict compliance standards and often track performance of participating assets. Battery operators need robust control systems and optimization strategies to meet these requirements consistently.

Capacity Constraints: Battery storage assets have limited capacity, and frequent cycling can reduce their life. Asset operators must balance ancillary service participation with energy market operations to avoid overuse. Proper state-of-charge management is critical to ensure the battery is available, especially when providing high-frequency ancillaries like regulation.

Market Volatility and Revenue Fluctuation: Ancillary services market prices are volatile and revenue streams vary based on demand and grid conditions. For example, compensation for frequency regulation may spike during high renewable output or extreme demand but decline during stable periods. Operators need to monitor market conditions to optimize ancillary service participation and ensure revenue is maximized.

How SYSO Helps with Ancillary Services 

SYSO’s expertise in managing battery storage assets allows clients to participate in ancillaries. SYSO’s services include:

Real-Time Monitoring and Dispatch: SYSO’s 24-hour NOC monitors grid conditions in real-time and dispatches storage assets to provide ancillaries like frequency regulation and spinning reserves. 24/7 monitoring means we can respond to market signals and capture revenue.

Data-Driven Optimization: SYSO’s data-driven approach ensures storage assets are not over-committed to ancillaries. We manage state-of-charge and prioritize high-value services to balance ancillary earnings with long-term asset health.

Compliance and Performance Management: SYSO provides compliance management to ensure battery assets meet all regulatory requirements and performance standards in ancillaries. SYSO’s experienced operators and software systems help clients stay compliant and maximize ancillary revenue.

Revenue Forecasting and Strategy Development: SYSO offers advanced revenue forecasting based on historical performance and market trends to help clients identify the most profitable ancillary services. We analyze market volatility and seasonal trends to help clients make informed decisions on ancillary participation.