Combating grid congestion and imbalances with energy storage
Grid congestion and imbalances of the grid are major problems. There is continuously more demand and supply of electricity than the grid can handle. With the increase in at times hard-to-predict energy sources, keeping the network in balance becomes increasingly challenging. Energy storage with batteries can help alleviate grid congestion and regulate the frequency of the electricity grid. In this blog post we will dive in general applications of combating grid congestion with batteries. Afterwards, we look at three different methods for grid balancing using energy storage, and their respective markets.
Why is grid congestion suddenly such a big issue?
The global push for sustainable development and carbon-free commitments has led to a surge in electrification, which is rapidly expanding the electricity grid. Renewable energy sources like wind or solar power pose a unique challenge due to irregular energy generation. The variable generation patterns make it difficult to accurately forecast available electricity. Grid congestion is a result of those fluctuations and bring the electricity grid to a halt. This issue needs to be addressed locally to eliminate bottlenecks.
Grid reinforcement is not enough
Both demand and supply of electricity are changing patterns with increasing ups and downs. Costly grid reinforcements have traditionally been the solution, and they take a considerable amount of time to implement. However, given the current growth and volatility of the electricity grid, this approach alone is insufficient to combat grid congestion. This is where battery energy storage systems (BESS) come in.
How can energy storage alleviate grid congestion?
Before diving into the details of the different grid balancing methods, batteries themselves can help with grid congestion. The four biggest advantages are explained in the following:
- Increased self-consumption
The battery storage systems can ensure that energy generated from your own renewable energies is stored and subsequently used in your own operations. A surplus of generated energy can be stored and used later, when necessary. This improves the efficiency of the renewable sources since less energy is lost. Therefore, you relieve the electricity grid, which in turn decreases congestion and your own processes can run smoothly.
- Back-up power
Is there a power failure on the grid? Then you can use the stored electricity in the battery, until everything works smoothly again.
- Savings on your electricity bill
By charging a battery system during off-peak hours at a low price and discharging when demand and prices are high, profits are possible. Your own personal costs are lower.
- Demand charge reduction
Since tariffs are often based on electricity usage at peak moments, a battery with peak shaving abilities can lower those tariffs structurally. The battery supplies energy at peak moments and only charges during low-demand hours. The general tariffs can decrease with energy storage being introduced to the grid.
Congestion management as an opportunity for mobile batteries
When congestion occurs, system operators in the Netherlands are obligated to carry out congestion management to alleviate local congestion problems. In the Netherlands, TenneT and the grid operators have set up a collaborative platform called GOPACS, which is used to coordinate the flexible power within the grid. Providers of flexible energy can connect with grid operators and vice versa. The supply of flexible power can be done either through redispatch bidding or in form of capacity limiting contracts (Capaciteitsberperkings Contract (CBC)).
Requirements for congestion management:
- Minimum size of the aggregated bids is 0.1 MW
- No minimum bid size
During the years 2018 to 2023 519887 MWh were requested on GOPACS, which is used as an estimation of the market size. With a recent requirement of the Netcode Congestion Management, which orders grid operators to apply congestion management up until a technical limit of 150% of the projected transport capacity, the market size increases. The lead time to qualify as a market party is 1-2 months.
Mobile battery systems can be a good fit with local congestion management. The ability of the batteries to store and release electricity quickly, coupled with their mobility and flexibility, makes them a good fit with congestion management and a decentralized energy system.
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:
- 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 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.
Below, you can see a table of a few important aspects for each of the three markets.
|~ 216 MW
|~ 340 MW (up & down)
|~ 250 MW (2025)
500 MW (expected for 2030)
|Max. 9 months
|No, each new asset needs to go through technical tests
|No technical prequalification necessary
How do regulations influence the market?
Regulations can differ from market to market. In the Netherlands, there are few recent developments that should be considered when contemplating participation in grid congestion and grid balancing methods.
In general, the Netherlands Authority for Consumers and Markets (ACM) sets up regulations regarding energy and the grid in the Netherlands in the Netcode Electricity. These regulations and laws also depend on the European plan for the electricity sector and the goals for the different member countries.
Currently, BESS is classified as electricity consumers and not producers. This impacts costs as transportation costs are paid entirely by electricity consumers, even though BESS are designed to return electricity to the grid and balance the grid when necessary. Additionally, the structure of transportation costs also has a negative impact. The tariffs consist of contracted power, maximum peak power, and transported energy. Especially the peak power can lead to high tariffs, which is a problem for BESS since frequency regulation or other related grid balancing services require high power peaks to work. The tariffs therefore increase without considering that the BESS deliver grid balancing services. This exact problem has been recognized by the ACM in March 2023, where they state that a discount on transportation costs for BESS could be applied if these BESS reduce grid congestion. This has not been implemented yet, which is a task for TenneT and other big players in the electricity grid.
Looking at both grid congestion and grid balancing, energy storage offers possibilities to alleviate both problems. Grid congestion is a local issue and demands local solutions. The congestion management market and the possibilities are in their beginning phase but expected to become more important with time. Here, mobile batteries with their local nature are a good market fit, but the processes of the market are not fully established yet.
For grid imbalances, strong market options are already established and running. However, mobile batteries are a fairly recent addition to this market and with high lead times and minimum bid sizes. The regulations are not prepared for their inclusion and there is more research and development to be done.
We hope that you take this information as inspiration for your own energy storage projects, and we will continue to research market developments to foster innovation and give you the best insights.
Contact us for more information on battery energy storage
Are you interested in leveraging battery systems to combat grid congestion or how to participate in grid balancing markets? Or do you want to find out more about Greener’s vision for our role in the energy market?
Get in contact with us to expand your knowledge!