Post: Understanding the decline in FCAS prices in Australia 

Understanding the decline in FCAS prices in Australia

Understanding the decline in FCAS prices in Australia

In recent years, Frequency Control Ancillary Services (FCAS) have provided a lucrative revenue stream for many I&C energy users. But recent FCAS prices have seen a significant decline. In its latest White Paper, Understanding the decline in FCAS prices, energy technology company GridBeyond explores the reasons why FCAS prices have fallen and what businesses can do to recoup lost revenues.

According to the latest Quarterly Energy Dynamics report (covering Q1 2025), published by AEMO, total FCAS costs reached $13M in Q1 2025, representing approximately 0.3% of the total cost of consumed energy* for the quarter. This marks a $16M decrease compared to the same period last year. This reduction was mainly driven by lower FCAS prices and a smaller number of volatility events during the quarter, relative to last year. In the same time period BESS output increased by 86% year-on-year in the NEM, reaching an average of 98MW . The significant decline in FCAS prices reflects the impact of increased battery storage capacity and evolving market dynamics. But although FCAS prices are decreasing, energy prices will stay high providing an opportunity for businesses to recoup lost revenues, with the right technology.

While falling FCAS prices present a challenge, they also mark a shift in how value is created in the evolving energy ecosystem. There are still strategic pathways for I&C businesses to recoup lost revenue. The key for I&C businesses is to shift from passive participation in legacy markets to proactively stacking value through energy flexibility like demand side response, process optimisation and energy storage. Businesses that embrace this change can recoup lost value and capture even greater returns in the long run -says the report.

In conclusion, demand side response and process optimisation can allow businesses to identify real flexibility opportunities, enable more informed decision-making in optimising energy and creating a more efficient and cost-effective energy strategy. 

What is FCAS? 

Grid frequency, typically measured in Hertz (Hz), represents the alternating current (AC) cycle frequency at which electricity is delivered. In most regions, this frequency is maintained at a constant level, often around 50 or 60 Hz, depending on the standards and practices of the area. 

In Australia, FCAS assists in maintaining the frequency of the grid as close to 50Hz as possible. However, fluctuations in electricity consumption and generation can cause deviations from this standard frequency which pose a risk to the stability of the grid, potentially leading to blackouts or other disruptions. FCAS refer to a set of mechanisms and services implemented within power systems to regulate and stabilise grid frequency by providing a fast injection or fast reduction of energy, to manage supply and demand.