Primary reserve through C&I energy storage systems
With the growing share of renewable energies and the associated volatility in electricity production, the stabilization of power grids is becoming increasingly important. Commercial & Industrial (C&I) energy storage systems play a key role in this, as their rapid response time makes them ideal for providing primary reserve. This article examines in detail how these storage solutions can contribute to grid stability.
What is Primary Reserve?
The primary reserve, also known as primary control reserve (PRL) or frequency containment reserve (FCR), is a central component of grid stabilization. It serves to compensate for short-term fluctuations in the grid frequency and thus ensure the stability of the power grid. In Europe, the grid frequency is kept constant at 50 Hz. Deviations from this value indicate an imbalance between electricity generation and consumption.
The primary reserve is the first and fastest stage of control reserve. It must be activated within a few seconds of a frequency deviation and be available for at least 15 minutes. The primary reserve reacts automatically and decentrally to frequency changes without the need for a central control command. This ensures a particularly fast response, which is essential for grid stability.
Why C&I energy storage systems for primary reserve?
Commercial & Industrial energy storage systems have properties that make them particularly suitable for providing primary reserve. Their ability to respond to frequency changes within milliseconds and to both absorb and release power makes them ideal candidates for this grid service. In contrast to conventional power plants, which often require several seconds to fully respond to power changes, battery storage systems can respond almost instantaneously.
The advantages of C&I energy storage systems in primary reserve are manifold. They are characterized by their extremely fast response time, which is well under the required 30 seconds. Furthermore, they can provide both positive and negative control power, meaning they can feed energy into or take energy from the grid as needed. This makes them particularly flexible and valuable for grid stabilization. Their high cycle stability allows frequent charging and discharging without significantly affecting their service life, making them ideal for use in primary backup applications with their frequent, short-term performance changes.
Technical Requirements for C&I Storage for Primary Reserve
To participate in the primary reserve market, C&I energy storage systems must meet specific technical requirements. The capacity must be at least 1 MW; in some countries, smaller individual capacities are also accepted by pooling several smaller systems. The full contracted capacity must be available within a maximum of 30 seconds after a frequency deviation; modern battery storage systems can usually achieve this in less than one second.
The availability of the capacity must be guaranteed for at least 15 minutes, which must be taken into account when dimensioning the storage capacity. The systems must also be equipped with automatic frequency measurement and control that independently detects frequency deviations and reacts accordingly. A secure communication connection for transmitting operating data to the grid operator is also required.
The power electronics of the storage system must be designed to handle rapid changes between charging and discharging processes. The battery management system must enable precise control of the charging and discharging power while protecting the battery from overload and harmful operating conditions. A sophisticated energy management system is necessary to keep the battery's state of charge (SoC) in the optimal range while ensuring the availability of the primary reserve.
Primary reserve through C&I energy storage systems
With the growing share of renewable energies and the associated volatility in electricity production, the stabilization of power grids is becoming increasingly important. Commercial & Industrial (C&I) energy storage systems play a key role in this, as their rapid response capabilities make them ideal for providing primary reserve. This article examines in detail how these storage solutions can contribute to grid stability.
What is Primary Reserve?
Primary reserve, also known as primary control reserve (PRL) or frequency containment reserve (FCR), is a central component of grid stabilization. It serves to compensate for short-term fluctuations in the grid frequency and thus ensure the stability of the power grid. In Europe, the grid frequency is kept constant at 50 Hz. Deviations from this value indicate an imbalance between electricity generation and consumption.
The primary reserve is the first and fastest stage of control power. It must be activated within a few seconds of a frequency deviation and be available for at least 15 minutes. The primary reserve reacts automatically and decentrally to frequency changes, without the need for a central control command. This ensures a particularly fast response, which is essential for grid stability.
Why C&I energy storage systems for primary reserve?
Commercial & Industrial energy storage systems have properties that make them particularly suitable for providing primary reserve. Their ability to respond to frequency changes within milliseconds and to both absorb and release power makes them ideal candidates for this grid service. Unlike conventional power plants, which often require several seconds to fully respond to power changes, battery storage systems can respond with virtually no delay.
The advantages of C&I energy storage systems in primary reserve are manifold. They are characterized by their extremely fast response time, which is well under the required 30 seconds. They can also provide both positive and negative control power, meaning they can feed energy into or take energy from the grid as needed. This makes them particularly flexible and valuable for grid stabilization. Their high cycle stability allows frequent charging and discharging processes without significantly affecting their service life, making them ideal for use in primary reserves with their frequent, short-term power changes.
Technical Requirements for C&I Storage for Primary Reserves
To participate in the primary reserve market, C&I energy storage systems must meet specific technical requirements. The capacity must be at least 1 MW, although in some countries, lower individual capacities are also accepted by combining several smaller systems (pooling). The full contracted power must be available within a maximum of 30 seconds after a frequency deviation, although modern battery storage systems can usually achieve this in less than one second.
Power availability must be guaranteed for at least 15 minutes, which must be taken into account when dimensioning the storage capacity. The systems must also be equipped with automatic frequency measurement and control that independently detects frequency deviations and reacts accordingly. A secure communication connection for transmitting operating data to the grid operator is also required.
The power electronics of the storage system must be designed to handle rapid changes between charging and discharging processes. The battery management system must enable precise control of charging and discharging performance while protecting the battery from overload and harmful operating conditions. A sophisticated energy management system is necessary to maintain the battery's state of charge (SoC) within the optimal range while ensuring the availability of primary reserve power.
Functioning of the Primary Reserve with C&I Storage
The basic mechanism of the primary reserve with battery storage is based on the continuous measurement of the grid frequency. The system reacts automatically to deviations from the target value of 50 Hz: If the frequency drops below 50 Hz, indicating a power shortage in the grid, the storage unit discharges and feeds energy into the grid. If the frequency rises above 50 Hz, indicating a power surplus, the storage unit absorbs energy from the grid.
This reaction is proportional to the frequency deviation according to a predefined characteristic curve. The full contracted power is activated at a frequency deviation of ±200 mHz. Ideally, the battery should always have a medium state of charge (typically 50%) in order to be able to provide both positive and negative control power. This is ensured by intelligent energy management, which maintains the state of charge within an optimal operating window without compromising availability for the primary reserve.
Prequalification for participation in the primary reserve market includes extensive tests in which the plant must demonstrate its ability to respond quickly and precisely to frequency changes. These tests simulate various frequency deviation scenarios and verify whether the plant can provide the required power within the specified time. After successful prequalification, the operator can participate in the tenders for primary reserves.
Economic viability of primary reserves with C&I storage
The provision of primary reserves can represent an attractive additional source of income for operators of C&I energy storage systems. Remuneration is usually paid through a capacity charge, which is paid for the provision of capacity, regardless of whether it is actually used. In Europe, this price typically ranges between €10 and €25 per MW per hour, although significant regional and temporal fluctuations can occur.
With continuous deployment, annual revenues of €100,000 to €200,000 per MW can be generated. This revenue can significantly improve the economics of a storage project and shorten payback periods. However, it should be noted that primary reserve markets in many countries are becoming increasingly saturated, which can lead to falling prices. Therefore, a careful market analysis and forecast of future price developments are essential.
The costs of participating in the primary reserve market include the investment in the storage system itself, the technical equipment for frequency measurement and control, the communication infrastructure, and ongoing operating and maintenance costs. In addition, there are costs for the balancing energy required to maintain the battery's state of charge in the optimal range. The economic viability calculation must also consider the opportunity costs if the storage system cannot be used for other applications due to participation in the primary reserve market.
Business Models and Marketing Strategies
Various business models have been established for the marketing of C&I storage systems in the primary reserve. With direct marketing, the owner of the storage system operates it independently and participates in the tenders for primary reserves. This requires appropriate expertise and human resources, but offers the greatest control and potentially the highest returns.
Alternatively, operators can cooperate with specialized service providers who take over the marketing and receive a portion of the proceeds in return. These service providers have the necessary expertise and can often achieve more favorable terms by bundling multiple plants. When marketing via virtual power plants, several decentralized plants are combined into a larger virtual pool, which lowers barriers to market entry and increases flexibility.
Hybrid business models combine primary reserve with other applications such as self-consumption optimization, peak shaving, or electricity trading. This multiple use can significantly improve economic efficiency, but requires complex energy management to coordinate the various, sometimes competing, usage requirements. The optimal strategy depends on various factors, including the size and technical characteristics of the storage system, local market conditions, the regulatory framework, and the operator's expertise and resources.
Regulatory Framework and Market Development
The regulatory framework for the primary reserve is subject to continuous adjustments that affect participation conditions and economic viability. In Europe, the harmonization of balancing power markets has led to more uniform conditions, facilitating cross-border trading. Tender periods have been shortened in many markets, from weekly to daily or even four-hourly tenders, which offers greater flexibility but also increases administrative costs.
Technical requirements are becoming increasingly standardized and adapted to the capabilities of modern technologies. Specific regulations have been introduced in some markets, particularly for battery storage systems, which take into account their special characteristics, such as limited energy capacity. Market development is characterized by increasing competition from new suppliers and technologies, which is leading to price pressure. At the same time, the need for primary reserves is growing due to the increasing share of volatile renewable energies, which could ensure stable demand in the long term.
Future developments could include new products and services that better reward the specific advantages of battery storage, such as extremely fast response times. One example is Enhanced Frequency Response (EFR) in the UK or Fast Frequency Response (FFR) in other markets. These developments should be considered in long-term investment decisions.
How the primary reserve with C&I storage works
The basic mechanism of the primary reserve with battery storage is based on the continuous measurement of the grid frequency. If deviations from the target value of 50 Hz occur, the system reacts automatically: If the frequency drops below 50 Hz, indicating a power shortage in the grid, the storage unit discharges and feeds energy into the grid. If the frequency rises above 50 Hz, indicating a power surplus, the storage unit absorbs energy from the grid.
This reaction occurs proportionally to the frequency deviation according to a predefined characteristic curve. The full contracted power is activated at a frequency deviation of ±200 mHz. Ideally, the battery should always have a medium state of charge (typically 50%) to be able to provide both positive and negative control power. This is ensured by intelligent energy management, which keeps the state of charge within an optimal operating window without compromising availability for the primary reserve.
Prequalification for participation in the primary reserve market includes extensive tests in which the plant must demonstrate its ability to respond quickly and precisely to frequency changes. These tests simulate various frequency deviation scenarios and verify whether the plant can provide the required power within the specified time. After successful prequalification, the operator can participate in the tenders for primary reserves.
Economic viability of primary reserves with C&I storage
The provision of primary reserves can represent an attractive additional source of income for operators of C&I energy storage systems. Remuneration is usually paid through a capacity charge, which is paid for the provision of capacity, regardless of whether it is actually used. In Europe, this price typically ranges between €10 and €25 per MW per hour, although significant regional and temporal fluctuations can occur.
With continuous deployment, annual revenues of €100,000 to €200,000 per MW can be generated. This revenue can significantly improve the economics of a storage project and shorten payback periods. However, it should be noted that primary reserve markets in many countries are becoming increasingly saturated, which can lead to falling prices. Therefore, a careful market analysis and forecast of future price developments are essential.
The costs of participating in the primary reserve market include the investment in the storage system itself, the technical equipment for frequency measurement and control, the communication infrastructure, and ongoing operating and maintenance costs. In addition, there are costs for the balancing energy required to maintain the battery's state of charge in the optimal range. The economic viability calculation must also consider the opportunity costs if the storage system cannot be used for other applications due to participation in the primary reserve market.
Business Models and Marketing Strategies
Various business models have been established for the marketing of C&I storage systems in the primary reserve. With direct marketing, the owner of the storage system operates it independently and participates in the tenders for primary reserves. This requires appropriate expertise and human resources, but offers the greatest control and potentially the highest returns.
Alternatively, operators can cooperate with specialized service providers who take over the marketing and receive a portion of the proceeds in return. These service providers have the necessary expertise and can often achieve more favorable terms by bundling multiple plants. When marketing via virtual power plants, several decentralized plants are combined into a larger virtual pool, which lowers barriers to market entry and increases flexibility.
Hybrid business models combine primary reserve with other applications such as self-consumption optimization, peak shaving, or electricity trading. This multiple use can significantly improve economic efficiency, but requires complex energy management to coordinate the various, sometimes competing, usage requirements. The optimal strategy depends on various factors, including the size and technical characteristics of the storage system, local market conditions, the regulatory framework, and the operator's expertise and resources.
Regulatory Framework and Market Development
The regulatory framework for the primary reserve is subject to continuous adjustments that affect participation conditions and economic viability. In Europe, the harmonization of balancing power markets has led to more uniform conditions, facilitating cross-border trading. Tender periods have been shortened in many markets, from weekly to daily or even four-hourly tenders, which offers greater flexibility but also increases administrative costs.
Technical requirements are becoming increasingly standardized and adapted to the capabilities of modern technologies. Specific regulations have been introduced in some markets, particularly for battery storage systems, which take into account their special characteristics, such as limited energy capacity. Market development is characterized by increasing competition from new suppliers and technologies, which is leading to price pressure. At the same time, the need for primary reserves is growing due to the increasing share of volatile renewable energies, which could ensure stable demand in the long term.
Future developments could include new products and services that better reward the specific advantages of battery storage, such as extremely fast response times. One example is Enhanced Frequency Response (EFR) in the UK or Fast Frequency Response (FFR) in other markets. These developments should be considered in long-term investment decisions.
Practical Example: C&I Storage for Primary Reserve
A practical example illustrates the application of C&I storage for primary reserve. A medium-sized company has installed and prequalified a 2 MW/2.5 MWh battery storage system to participate in the primary reserve market. The system is equipped with state-of-the-art power electronics and an intelligent energy management system that continuously ensures the optimal state of charge.
The company participates in daily tenders and was able to achieve an average remuneration of €15 per MW per hour in its first year of operation. With a continuous supply of 2 MW, this resulted in annual revenues of approximately €260,000. After deducting operating and maintenance costs and balancing energy costs, an annual net income of approximately €200,000 remained.
This additional revenue significantly improved the payback period of the storage system from the originally planned 10 years to approximately 7 years. The company now plans to expand the system by an additional 1 MW/1.5 MWh and implement a hybrid business model that combines primary reserve with self-consumption optimization to further increase profitability.
Challenges and Solutions
Despite the attractive opportunities, operators of C&I storage systems for primary reserve face various challenges. One of the biggest challenges is ensuring the optimal battery state of charge. Since both positive and negative control power must be provided for the primary reserve, the state of charge should ideally be around 50%. However, continuous frequency fluctuations can cause a drift in the state of charge, which must be compensated for.
Modern energy management systems solve this problem with intelligent algorithms that continuously monitor the state of charge and correct it as needed. This can be achieved through targeted, small charging or discharging processes that do not affect the availability of the primary reserve. Alternatively, balancing energy can be traded on the intraday market to correct the state of charge.
Another challenge is increasing market competition and the associated price pressure. Operators can respond by developing hybrid business models that combine different revenue streams. By reusing storage for different applications, economic efficiency can be improved, even if revenues from the primary reserve decrease.
Future Perspectives
The future of primary reserve energy with C&I storage will be shaped by various trends. Technological developments are leading to more powerful and cost-effective storage systems, improving economic efficiency. New battery technologies with higher energy density, longer service life, and improved safety features are becoming increasingly available.
At the same time, the digitalization and automation of energy markets will progress, leading to more efficient trading processes and new business models. Artificial intelligence and machine learning will be increasingly used to optimize storage operations to maximize yields and extend battery life.
The increasing integration of renewable energy and the phase-out of conventional energy sources will increase the demand for primary reserve and other system services. This could lead to more stable or even rising prices in the long term, despite increasing competition. New market mechanisms and products specifically tailored to the characteristics of battery storage systems could open up additional revenue streams.
Conclusion
The provision of primary reserve through C&I energy storage systems offers an attractive opportunity to generate additional revenue while making an important contribution to grid stability. The unique characteristics of battery storage systems, particularly their rapid responsiveness and flexibility, make them ideal candidates for this grid service.
Despite the challenges posed by increasing competition and regulatory changes, the long-term outlook remains positive. The growing importance of renewable energies and the associated need for flexible balancing services will support the demand for primary reserve in the long term. Through intelligent business models and the combination of various applications, operators of C&I storage systems can achieve attractive returns even in a dynamic market environment.
Companies that invest in this technology not only position themselves for additional revenue streams, but also make an important contribution to the energy transition and the stability of the future energy system. With advancing technological development and decreasing costs, the provision of primary reserve through C&I storage will become increasingly attractive and establish itself as an integral part of modern energy systems.
Practical Example: C&I Storage for Primary Reserve
A practical example illustrates the application of C&I storage for primary reserve. A medium-sized company has installed and prequalified a 2 MW / 2.5 MWh battery storage system to participate in the primary reserve market. The system is equipped with state-of-the-art power electronics and an intelligent energy management system that continuously ensures the optimal state of charge.
The company participates in daily tenders and was able to achieve an average remuneration of €15 per MW per hour in its first year of operation. With a continuous supply of 2 MW, this resulted in annual revenue of approximately €260,000. After deducting operating and maintenance costs and balancing energy costs, an annual net income of approximately €200,000 remained.
This additional revenue significantly improved the payback period of the storage system from the originally planned 10 years to approximately 7 years. The company now plans to expand the system by a further 1 MW / 1.5 MWh and implement a hybrid business model that combines primary reserve with self-consumption optimization to further increase profitability.
Challenges and Solutions
Despite the attractive opportunities, operators of C&I storage systems for primary reserves face various challenges. One of the biggest is ensuring the optimal battery state of charge. Since the primary reserve must provide both positive and negative control power, the state of charge should ideally be around 50%. However, continuous frequency fluctuations can lead to a drift in the state of charge, which must be compensated for.
Modern energy management systems solve this problem with intelligent algorithms that continuously monitor the state of charge and correct it as needed. This can be achieved through targeted, small charging or discharging processes that do not affect the availability of the primary reserve. Alternatively, balancing energy can be traded on the intraday market to correct the state of charge.
Another challenge is increasing market competition and the associated price pressure. Operators can respond to this by developing hybrid business models that combine different revenue streams. By reusing the storage for different applications, economic efficiency can be improved, even if revenues from the primary reserve decrease.
Future Perspectives
The future of primary reserve energy storage with C&I storage will be shaped by various trends. Technological developments are leading to more powerful and cost-effective storage systems, improving economic efficiency. New battery technologies with higher energy density, longer service life, and improved safety features are becoming increasingly available.
At the same time, the digitalization and automation of energy markets will progress, leading to more efficient trading processes and new business models. Artificial intelligence and machine learning will be increasingly used to optimize storage operations to maximize yields and extend battery life.
The increasing integration of renewable energy and the phase-out of conventional energy sources will increase the demand for primary reserve and other system services. This could lead to more stable or even rising prices in the long term, despite increasing competition. New market mechanisms and products specifically tailored to the characteristics of battery storage could open up additional revenue streams.
Conclusion
The provision of primary reserve through C&I energy storage systems offers an attractive opportunity to generate additional revenue while making an important contribution to grid stability. The unique characteristics of battery storage systems, particularly their rapid responsiveness and flexibility, make them ideal candidates for this grid service.
Despite the challenges posed by increasing competition and regulatory changes, the long-term outlook remains positive. The growing importance of renewable energies and the associated need for flexible control power will support the demand for primary reserve in the long term. Through intelligent business models and the combination of various applications, operators of C&I storage systems can achieve attractive returns even in a dynamic market environment.
Companies that invest in this technology not only position themselves for additional revenue streams, but also make an important contribution to the energy transition and the stability of the future energy system. With advancing technological development and decreasing costs, the provision of primary reserve through C&I storage will become increasingly attractive and establish itself as an integral part of modern energy systems.