Ancillary services
Ancillary services: Why they matter in electricity markets
Educational content
September 09, 2025
5 min read
As renewable energy penetration accelerates, keeping the power grid stable is becoming more complex. That’s where ancillary services come in. Learn the basics of ancillary services in electricity markets right here.
Ancillary services. Everyone dealing with the European electricity markets has been talking about this new buzzword for years. The reason is power and frequency stabilization. Power imbalances arise when there is a mismatch between production and consumption, resulting from sudden changes in either power demand or production. As renewable energy sources continue to gain ground in the energy mix, the risk of power imbalances increases due to the intermittent nature of renewables.
Therefore, Transmission System Operators (TSOs) procure balancing services, such as ancillary services, to secure the grid. But what exactly are these services, and why should operators of renewable plants care?
Let’s break it down.
What are ancillary services in electricity?
Ancillary services are the invisible backbone of the electricity grid. They ensure the system operates smoothly, even when supply and demand fluctuate by the second. These services support everything from frequency regulation to voltage control and black start capabilities.
It’s the responsibility of national TSOs to maintain balance in the electricity grid. To do this, they procure ancillary services – such as frequency regulation and reserves – from energy facilities and companies capable of delivering rapid, reliable responses.
When an imbalance occurs – say, due to a sudden drop in wind generation or a spike in demand – the TSO activates these service providers. These companies, which may include renewable power plants with BESS, adjust their output or consumption in real-time to help stabilize the grid.
In return, they’re compensated, either for reducing generation (curtailment) or increasing consumption. This model ensures that system stability is maintained without TSOs directly operating the flexible capacity themselves.
Where do ancillary services fit into the power market?
The European electricity and power market is broadly divided into the wholesale market and the balancing market, each with distinct roles in maintaining grid functionality and economic efficiency.
- The wholesale electricity market covers day-ahead and intraday trading through power exchanges such as Nord Pool and EPEX. These markets match electricity supply with demand and establish prices based on market dynamics.
- The balancing market is managed by the TSOs to ensure real-time grid stability. It involves the procurement of balancing services, such as frequency regulation and power reserves, which are activated as needed to correct imbalances and respond to grid events.
Why do ancillary services in electricity markets matter?
The ancillary services markets help improve grid reliability. From a technical standpoint, ancillary services keep the lights on. When there is too much or too little power in the grid, the frequency starts to drift, as illustrated below.
In European grids, the frequency must be maintained at 50 Hz at all times. Any deviation, and you risk damage to equipment or even blackouts. Therefore, grid operators rely on fast-responding assets to step in and stabilize the system by restoring frequency. Learn more about the details of frequency control from Danish TSO Energinet.
In the Central European balancing markets, you operate with three different ancillary services for frequency stabilization:
1
Frequency Containment Reserve (FCR)
Known as the primary reserve and reacts within seconds to balance grid frequency.
2
Automatic Frequency Restoration Reserve (aFRR)
Called secondary reserve and kicks in after about 30 seconds to stabilize frequency deviations.
3
Manual Frequency Restoration Reserve (mFRR)
Is the tertiary reserve and comes into play within 15 minutes to provide longer-duration balancing power.
What ancillary services are relevant to renewable power generation?
For renewable power plants, the most relevant ancillary services are those tied to frequency stability, as shown above. This is because generation types like wind and solar can respond fast and automatically to grid events.
Especially hybrid power plants, which combine diverse asset types such as wind, solar PV, and BESS, are favorable for participating in ancillary services related to frequency control. Unlike traditional power plants, BESS can respond in milliseconds, making them ideal for frequency regulation
Is there a financial benefit of ancillary services in electricity markets?
Another key reason ancillary services are gaining traction, especially among renewable energy players, is their growing economic value. In many electricity markets, these services are monetized, meaning providers are paid for making their flexible capacity available, even if it’s not activated.
This financial incentive is prompting more power plant owners to explore how they can qualify and participate in ancillary service markets. In that way, ancillary services offer more than just grid support. They also represent a strategic revenue opportunity for forward-looking energy operators.
What is the opportunity for hybrid power plants?
When hybrid plants combine wind, solar, and BESS, they don’t just generate energy. They become flexible grid participants. So, for these plant owners, tapping into the ancillary services markets can turn flexibility into profitability. With the right control setup and market access, operators can tap into ancillary services to:
Diversify revenue streams
Increase asset utilization
Support grid stability as renewable shares rise
Overall, the discussions about ancillary services demonstrate that, as markets evolve and system needs grow, these services are moving from niche to necessity.
