Post: Ancillary Services…everything you wanted to know

Ancillary Services…everything you wanted to know

A recent IEEE paper co-authored by GridBeyond’s experts explores how ancillary services are evolving to meet the shift toward renewable energy.

In this interview, we speak to lead author and GridBeyond Process Optimization Director Vahid Hosseinnezhad about what ancillary services are, why they matter, and how markets such as Ireland, Great Britain, and Japan are adapting.

Q: What exactly are ancillary services, and why should anyone outside the energy industry care?

Most people experience electricity as something simple: you turn something on, and power is there. But behind that simplicity, the system has to remain stable every second of the day. That is where ancillary services come in.

Ancillary services are the functions that help keep the power system secure, balanced, and reliable. They include things like frequency control, voltage support, reserve capacity, and restoration services after disturbances. In the past, these services were mainly provided by large conventional power plants and were more or less embedded in the system in the background. They were not something most people ever needed to think about.

That has changed. As electricity systems have been restructured and renewable generation has grown, ancillary services have become much more visible and much more important. They are now increasingly procured as distinct products through market mechanisms, and they are being delivered by a much wider range of technologies, including batteries, demand response, electric vehicles, and microgrids.

Why should people outside the industry care? Because these services are essential for keeping the lights on in a cleaner, more renewable-powered grid. They are also becoming a major source of value for flexible energy users and asset owners. So while ancillary services may sound technical, they sit right at the centre of the energy transition.

Q: The paper talks a lot about “fast frequency response” and “synthetic inertia.” Can you explain what these are and why they matter so much now?

Frequency is one of the key indicators of grid stability. In an AC power system, frequency reflects the balance between generation and demand. If there is a sudden mismatch, for example if a generator trips or demand jumps unexpectedly, frequency starts to move away from its nominal value. If that deviation is too large or too fast, the system can become unstable.

Traditionally, large synchronous generators naturally helped resist those changes because they had physical rotating mass. That physical inertia slowed the rate of frequency change and bought time for other control actions. In power systems with high shares of wind and solar, that natural inertia is reduced because many renewable plants are connected through power electronics and do not inherently provide the same stabilising effect.

Fast Frequency Response, or FFR, has become important because it can act extremely quickly to arrest frequency decline or rise. It is designed to inject or absorb power within a very short timeframe, often in seconds or even faster depending on the market design. This rapid response buys time for slower reserves such as FCR or FRR to act. Batteries are especially well suited to this because they can respond almost instantaneously and with a high degree of control.

Synthetic inertia is related, but slightly different. It refers to control strategies that make inverter-based resources behave in a way that mimics the stabilising effect of physical inertia. In other words, instead of relying on a spinning turbine, the response is created through advanced control algorithms in converters and power electronics.

These services matter now because the grid is changing. In a low-inertia system with high renewable penetration, stability can no longer rely only on the old model. Fast frequency response and synthetic inertia are becoming critical tools for keeping modern power systems secure.

Q: What has Ireland done differently?

Ireland is a particularly interesting case because it operates a relatively small and weakly interconnected island system, which makes stability challenges more acute. At the same time, Ireland has been one of the leaders in integrating variable renewable generation, especially wind.

The major turning point was the DS3 programme, which stands for Delivering a Secure, Sustainable Electricity System. It was introduced by the SEM Committee in 2011 specifically to deal with the operational challenges of running a system with high levels of non-synchronous renewable generation. By 2022, Ireland had reached a System Non-Synchronous Penetration, or SNSP, of 75%, which was a major achievement internationally.

What Ireland did well was move beyond a simple reserve framework and build a more granular suite of system services tailored to the actual needs of a high-renewables system. DS3 includes 14 services covering frequency control, inertia and stability, voltage support, and ramping flexibility. These include services such as Fast Frequency Response, Primary and Secondary Operating Reserve, Synchronous Inertial Response, Fast Post-Fault Active Power Recovery, and different ramping margin products.

That matters because it reflects a more realistic view of what a modern grid needs. Instead of assuming one generic reserve product can do everything, Ireland created a more targeted toolbox. The programme has supported higher renewable integration, reduced curtailment, and helped maintain system security.

Looking ahead, Ireland is also planning further evolution, including new services such as Enhanced Frequency Response and Synthetic Inertia. So Ireland has not just adapted to the energy transition, it has in many ways been a leader in redesigning ancillary services around it.

Q: Great Britain has been through its own transformation. What does that look like in practice?

Great Britain’s journey has been different, but equally significant. Historically, the system relied on more traditional products such as Mandatory Frequency Response and Firm Frequency Response, with procurement happening through longer tender cycles. That made sense in a system dominated by conventional generation, but it became less suitable as renewable penetration increased and system dynamics became faster and more complex.

As wind and solar expanded, Great Britain needed faster and more flexible services. That led to the development of dynamic frequency products such as Dynamic Containment, Dynamic Moderation, and Dynamic Regulation. These services were designed to respond much more quickly and more precisely to frequency deviations, and they are procured through much more frequent auction processes compared with older arrangements.

This is important in practice because it gives the system operator better tools to match procurement to real system needs. It also opens the market more effectively to newer technologies such as batteries and demand-side flexibility.

Great Britain has also done a lot of work on the stability side. Through initiatives such as the Stability Pathfinder, it has contracted technologies like synchronous condensers and grid-forming inverters to provide inertia and short-circuit strength. That helps reduce the need to keep conventional fossil plants running just for stability reasons.

So in practical terms, Great Britain has been moving from slower, more static ancillary service arrangements toward a more dynamic, technology-neutral, and high-frequency procurement model. It is a good example of how market design evolves when the physical characteristics of the grid change.

Q: What makes Japan’s situation distinctive?

Japan is distinctive for a few reasons. One is its history. The Fukushima accident in 2011 triggered a major rethink of the country’s energy system, including market structure, energy security, and the integration of new technologies.

Another is its grid architecture. Japan is not a single uniform system. It spans ten regional service areas and also operates across both 50 Hz and 60 Hz zones, which creates unique coordination challenges. That makes ancillary service design and system balancing more complex than in many other markets.

In recent years, Japan has moved toward a more standardised and competitive balancing framework. From 2021 onward, ancillary services began to be procured through a Balancing Market under OCCTO oversight. The core products include Frequency Containment Reserve, Frequency Restoration Reserve, and Replacement Reserve. Japan also has a particularly interesting product called Replacement Reserve for FIT, or RR-FIT, which is designed to manage renewable forecast errors linked to feed-in-tariff generation.

That is a good example of a market designing products around its own specific needs rather than simply copying someone else’s framework. It shows that ancillary service design has to reflect local system conditions, regulation, and renewable mix.

Japan is also increasingly looking at batteries, virtual power plants, and fast-response technologies as part of its pathway toward higher renewable penetration and long-term decarbonisation. So what makes Japan distinctive is the combination of its geography, its system architecture, and the way reform has been shaped by a very specific national context.

Q: How are battery energy storage systems changing the picture for grid operators and for energy businesses?

Batteries have become one of the most important enabling technologies in the ancillary services space. Their technical strengths are exactly what modern power systems increasingly need. They can respond very quickly, provide both import and export capability, operate with high precision, and support services across multiple timescales.

From a grid operator’s perspective, batteries are valuable because they can deliver very fast frequency support, help with voltage regulation, manage congestion, smooth renewable output, support resilience, and even contribute to black start in some cases. In systems with lower inertia and more variability, those capabilities are extremely valuable.

From a business perspective, batteries are attractive because they are not limited to one use case. A single battery asset can participate in frequency response, reserve products, energy arbitrage, congestion management, or local network support depending on the market and the control strategy. That opens the door to revenue stacking, where one asset can access multiple value streams rather than relying on only one.

Of course, unlocking that value is not automatic. It depends on advanced optimisation, forecasting, and control. The commercial opportunity comes not just from owning the battery, but from operating it intelligently across different services, markets, and time horizons.

That is why batteries have moved from being a niche technology to a central part of modern ancillary service provision. They fit extremely well with the needs of a renewable-rich grid and with the market trend toward faster, more performance-based services.

Q: What about electric vehicles? The paper describes some real-world pilots. What did they show?

The main message from the pilots is that EVs can provide ancillary services in practice, not just in theory. The concept of vehicle-to-grid, or V2G, has been discussed for a long time, but the pilots reviewed in the paper show that real-world implementations are now demonstrating technical feasibility and commercial potential.

For example, Denmark’s Parker project showed that standard commercial EVs — not prototypes — can, using bidirectional charging, successfully track frequency regulation setpoints and meet the performance requirements for frequency containment services. This was an important proof point, as it demonstrated that EVs can behave like real ancillary service providers when properly aggregated and controlled.

In Great Britain, projects such as Sciurus and Powerloop showed that EVs can also create value through combinations of smart charging, tariff optimisation, and ancillary service participation. These projects demonstrated that household or fleet-based EVs can be coordinated in ways that respect user needs while still supporting the system.

The broader lesson is that EVs are flexible assets. Most of the time they are parked, and with the right infrastructure and control systems, that flexibility can be monetised. The challenge is not whether they can technically provide services. The challenge is building the market access, aggregation model, charging infrastructure, and customer proposition that allow them to do so at scale.

So the pilots are encouraging. They suggest that EVs can play a meaningful role in ancillary services, particularly when combined with aggregation platforms and smart control.

Q: The paper mentions demand response as a source of ancillary services. Is that really practical for businesses?

Yes, absolutely, although it depends on the business and the process. Demand response is one of the most practical and underused sources of flexibility in many systems.

The core idea is simple: instead of always balancing the grid by adjusting generation, you can also adjust demand. Many industrial and commercial sites have loads that can be shifted, reduced, or controlled for short periods without affecting core operations too severely. That flexibility can then be used to support the system through frequency response, voltage support, congestion management, or power quality services.

The paper highlights that sectors such as food, steel, aluminium, and chemicals have all shown potential to participate meaningfully in demand response. It also discusses examples such as supermarket refrigeration being modelled for fast frequency response.

Of course, practicality depends on the operational context. Businesses will only participate if the solution is technically reliable, economically worthwhile, and does not disrupt production. That is where control strategies, aggregation models, and site-level optimisation become important.

So demand response is practical, but it has to be done properly. When it is, it can turn operational flexibility into a real revenue stream while also helping the wider power system.

Q: What is the role of aggregators and Virtual Power Plants, and why are they increasingly important?

Aggregators and Virtual Power Plants are becoming increasingly important because many of the most useful flexible resources in the system are relatively small and distributed. On their own, a single battery, EV fleet, or flexible load may be too small or too fragmented to access ancillary service markets directly. Aggregation solves that.

An aggregator combines multiple assets into a single market-facing portfolio. That portfolio can then participate in services such as frequency regulation, voltage support, or reserve products in a coordinated way. A Virtual Power Plant, or VPP, takes that one step further by controlling those distributed assets so they behave as a single flexible resource from the system operator’s perspective.

This is important because the future grid will rely much more on distributed flexibility rather than only on a few large conventional plants. Aggregators provide the commercial and technical bridge between those smaller assets and the market.

The paper also highlights that market design matters here. If barriers such as minimum capacity thresholds or restrictive participation rules remain in place, a lot of distributed flexibility will stay locked out. But when market frameworks allow aggregation, the system can access a much broader pool of flexible resources.

So aggregators and VPPs are not just a commercial convenience. They are becoming a core part of how modern ancillary services will be delivered in high-renewables systems.

Q: The survey covers Ireland, Great Britain, and Japan in detail. What are the most important lessons that cut across all three?

One key lesson is that ancillary service design cannot stay static while the power system is changing so quickly. As renewable penetration rises and synchronous inertia falls, markets need faster, more granular, and more targeted services.

A second lesson is that market design matters just as much as technology. The same battery, flexible load, or EV fleet can create very different outcomes depending on whether the market allows transparent access, rewards performance properly, and provides the right product structure.

A third lesson is that some services that used to come automatically from conventional generation now need to be explicitly designed and procured. Inertia, dynamic reactive support, fast post-fault recovery, and similar services are no longer side effects of the old power system. In a modern low-carbon grid, they increasingly need to be recognised as products in their own right.

And finally, all three markets show that coordination between transmission-level and distribution-level flexibility is becoming increasingly important. As more flexible assets sit in distribution networks, unlocking their system value depends on clear coordination, data exchange, and market rules.

So although Ireland, Great Britain, and Japan have very different histories and structures, they all point in the same direction: ancillary services are becoming more dynamic, more technology-diverse, and more central to the success of the energy transition.

Q: What does the future look like, and what should businesses with flexible assets be thinking about?

The overall direction is clear. Power systems are becoming more renewable, more digital, and more decentralised. That means the need for ancillary services is not going away. It is increasing.

We are likely to see continued growth in fast-response products, synthetic inertia, advanced voltage support, and more sophisticated coordination between different layers of the grid. At the same time, AI, machine learning, and digital platforms will play a bigger role in forecasting system needs, automating dispatch and bidding, and optimising portfolios of flexible assets in real time.

For businesses, the main point is that flexibility is becoming more valuable. If a company has batteries, flexible industrial load, EV fleets, backup generation, or hybrid energy systems, those assets may be able to do more than simply support the site itself. They may also be able to create value by participating in ancillary service markets.

But that opportunity comes with complexity. Participating effectively requires good forecasting, strong optimisation, technical compliance, and an understanding of how multiple markets interact. That is why energy management and aggregation platforms are becoming so important.

So the question is no longer really whether flexibility has value. It does. The real question is how businesses can unlock that value in a way that is technically robust, commercially optimised, and operationally practical.