Combating grid congestion and imbalances with energy storage

The 3 most common methods to relieve the grid and their markets using energy storage

While there are some general advantages of using energy storage to combat grid congestion, there is another issue they can help address: imbalances on the grid. The frequency of the electricity grid is impacted by changes in the demand and supply. With a change in frequency from the usual 50 Hz, the safe operation of equipment cannot be ensured anymore. Therefore, specific methods and markets are in place to add or subtract additional capacity and ensure that the frequency stays at a stable level. If you have free capacity of energy storage at your disposal, you can participate in the markets of those methods. In the following paragraphs, we will dive into the most important information concerning the following three methods and their markets:

• FCR,
• aFRR,
• and Passive Balancing.

Frequency Containment Reserve (FCR)

Frequency Containment Reserve (FCR) is a service provided by batteries in behind-the-meter systems. It involves rapidly responding to frequency changes in the grid to maintain its stability. By injecting or absorbing power as needed, batteries participating in FCR help control grid frequency within predefined limits.

To ensure that there is enough capacity available to use FCR, when the frequency of the grid is affected, TenneT has set up a market with an auction system in the Netherlands for the suppliers of that capacity. There are several requirements for FCR that need to be fulfilled to participate in this market:

• The minimum size requirement is 1 MW;
• The system needs to be able to deliver electricity instantly for a full delivery time of 30 seconds;
• A deadband of +/- 10 MHz will need to be enforced;
• The standard frequency rate of +/- 200 MHz must be supported;
• There is a 15-minute requirement, which means that the system must help within a time frame of 15 minutes;
• The full capacity for FCR must be reached again after two hours.

When all requirements are met, there is the possibility to participate in the daily auction, which includes six blocks of four hours. Renumeration of FCR is based on the capacity and fast reaction times, while the energy component becomes significant because of this. The market size within the Netherlands was about 116 MW in 2022 with the potential of an additional 100 MW since BESS are allowed to deliver to other countries. The lead time including all certifications, API’s and the final qualification amounts to nine months (2022). Prequalification is possible, so after a first qualification any similar assets can be qualified faster.

Automatic Frequency Restoration Reserve (aFRR)

Sometimes, power grids need a little extra help to restore their balance after a disturbance. This is where Automatic Frequency Restoration Reserve (aFRR) comes into play. Similar to FCR, aFRR is a behind-the-meter service that provides rapid response power reserves to restore the grid frequency back to its normal level after a disturbance. It takes over from FCR after a frequency change and therefore requires more energy for a longer amount of time.

Similarly to FCR, there is an established markt for aFRR. The requirements for this market to offer aFRR are as follows:

• The system needs to be able to deliver large amounts of energy for long times;
• The required range rate is 20% per minute, which means that 100% of the necessary energy needs to be delivered within 5 minutes;
  • The required energy is based on the Area Control Error (ACE), which is the difference between the scheduled and the actual power available on the grid.

In this market, you can either bid voluntarily or have a contract concerning capacity. The auction is held daily for a time frame of 24 hours. The total market size in 2023 is around 320 MW, according to TenneT’s minimum contracted capacity. This includes both upwards and downwards – also called positive and negative aFRR. The lead time to receive a qualification from TenneT for aFRR is a maximum of nine months. However, there is no prequalification possible, which means that each new asset needs to go through a qualification process.

Passive Balancing

Passive balancing works by voluntarily responding to current and future imbalances in the grid. The Dutch Transmission System Operator TenneT continuously monitors the grid for imbalances between supply and demand. The data on imbalances is published minute-by-minute and TenneT chooses whether and which bids to activate according to a predetermined bid ladder. After the balancing action is completed, the actual imbalance is calculated, and the chosen bidders receive compensation accordingly. Through this system, there is a financial incentive to maintain grid stability for market participants. However, there is also the risk of paying TenneT the imbalance price if the action of balancing increased imbalance in the grid. This can happen for instance due to the delay between publishing and the real-time imbalances.  

The requirements to participate in passive balancing are the following: 

• There is no minimum bid size; 
• Technical prequalification tests are not necessary; 
• A contract with a market participant, for instance a Balancing Responsible Party (BRP) is needed to participate in this market, since the BRP is responsible with their portfolio to balance the grid; 
• An energy meter needs to be installed at the responsible partner to enable passive balancing with a new supplier; 
• The software of the battery system needs to be capable of reacting to the market information. 

The lead time to participate in passive balancing is normally 1-2 months, depending on how quickly the energy meter is installed. And while there are no official numbers on the size of the market, it is estimated to be ~250 MW in 2025 and grow up to 500 MW in 2030. In general, there is no fixed auction period as with the other two markets since it operates continuously. The biggest barrier in this case is a suitable algorithm that can react appropriately to market information.