Ancillary services (AS) are grid reliability products that system operators procure alongside energy to keep the power system balanced. The three categories of AS products procured in ISO-NE’s wholesale markets are regulation, reserves, and energy imbalance services.

• Regulation resources respond every few seconds to hold grid frequency at 60 Hz.
• Reserves sit idle as committed capacity and activate only when a generator trips offline or if there is a sudden demand spike.
• Energy imbalance services cover the gap between day-ahead cleared supply and real-time demand when there is a shortage of real-time resources.

Batteries held 84% of cleared regulation capacity by Fall 2025, up from 24% in 2020. They are less dominant in reserves and imbalance services, which pay only when called upon (typically only during scarcity events). There are other ancillary services, including as blackstart and voltage support, but they are not procured through wholesale markets.

Among regulation, reserves, and imbalance services there exist 5 AS products

Regulation is a continuous bidirectional service. Resources follow Automatic Generation Control (AGC) signals every 4 seconds, absorbing or injecting power to hold grid frequency at 60 Hz. In ISO-NE, regulation is a system-wide stability service with a daily-set requirement for each hour of the day between 90-95 MW, averaging 93 MW.

Ten-Minute Spinning Reserve (TMSR) must come from resources that are already online. Both the generator side and the demand side of a battery can qualify. The demand side qualifies by curtailing active charging load within 10 minutes for both batteries and other assets.

Ten-Minute Non-Spinning Reserve (TMNSR) fills the remainder of the combined 10-minute requirement not met by TMSR. Resources can be offline at dispatch time, as long as they reach full designated output within 10 minutes. Demand response, excluding batteries, can qualify for some resources by reducing consumption.

Thirty-Minute Operating Reserve (TMOR) sets the reserve floor. Any dispatchable resource qualifies as long as it can come online within 30 minutes, including demand response, but excluding the demand side of a battery in the same window.

Energy Imbalance Reserve (EIR) is a day-ahead-only product, introduced February 28, 2025. It covers the gap between forecast supply and real-time demand and functions as a real-time hedge for the ISO against price spikes or resource shortages. It is open to all dispatchable resources with a day-ahead energy obligation.

Higher-grade reserves count toward lower-grade requirements: TMSR above the requirement satisfies TMNSR, and TMNSR surplus satisfies TMOR.

What are the requirements for participation?

General requirements:

Reserve participation has two hard gates: electronic dispatch capability and exclusion from the first contingency supply calculation. A resource must also be able to hold its reserve output for at least one hour if activated.

Regulation imposes additional requirements on participants:

• Follow AGC every 4 seconds
• Meet a minimum capacity of 0.1 MW (the floor for conventional generation is 5 MW)

EIR has no special registration requirements. Any resource with a day-ahead energy award qualifies. The only gate is having a cleared day-ahead schedule.

Market access for batteries depends on how a it registers with ISO-NE:

A Continuous Storage Facility (CSF) registers simultaneously as a Generator Asset, a Dispatchable Asset Related Demand (DARD or demand response), and an Alternative Technology Regulation Resource (ATRR). A CSF must be able to execute a full-swing ramp from maximum consumption to maximum output within 10 minutes. This triple registration gives it a discharge side and a load-curtailment side, both callable by ISO-NE. CSFs can access regulation, all day-ahead and real-time reserve products, and energy imbalance reserve.

A Binary Storage Facility (BSF) registers as a Generator Asset and demand response only. It can participate in all reserve and energy markets, but cannot access regulation. Without ATRR status, it cannot access the regulation market and is locked out until Order 2222-related tariff changes take effect, expected November 1, 2026. BSFs can participate in reserves and the EIR.

What have historical prices and quantities looked like?

Regulation has averaged 93 MW on a daily basis, but can range from 90-95 MW. Average annual regulation prices dropped from $31/MW-hr in 2022 to $14/MW-hr in 2025, a 54% decline.

Because of the relatively small pool, regulation clearing prices fell as batteries entered the market with storage capturing 84% of cleared capacity by Fall 2025, up from 24% in 2020 and 81% in Fall 2024. Available battery capacity grew from 237 MW in Fall 2024 to 598 MW in Fall 2025. In other markets, it has historically taken longer to reach this level of battery saturation.

Real-time reserves

Real-time reserve prices clear at $0 for most hours. Prices rise only when the system redispatches to maintain reserve requirements or enters genuine reserve deficiency. In 2025, meaningful reserve payments concentrated in two events: three days in late June accounted for 54% of full-year RT reserve payments ($15M of $28M). Add November 23 and four days in 2025 accounted for 62% of real-time reserve payments ($17M).

Reserve requirements are sized to the two largest contingencies on the system. The total 10-minute requirement equals 115% of the energy from the largest online transmission line into, or generator within, New England. In practice, this is typically 1,380–1,610 MW(usually the DC tie to Hydro-Quebec or a large nuclear unit). Within that 10-minute total, TMSR must cover at least 25%.

The total 30-minute requirement equals 50% of the second-largest contingency. ISO-NE also carries a separate replacement reserve (160 MW June through September, 180 MW October through May) to restore headroom after a contingency fires.

Local 30-minute reserve requirements apply in three import-constrained zones: Connecticut, SWCT, and NEMA/Boston. When binding, they clear at zonal prices, but they rarely bind in practice, and system-wide needs typically set reserves.

Day-ahead ancillary services (DA A/S)

The total DA A/S market includes day-ahead reserve products and the EIR. DA A/S launched March 1, 2025. Net payments totaled $13.1M in Spring 2025, $57.4M in Summer 2025, and $34.1M in Fall 2025, totaling $104.6M across the first three seasons. That exceeds the combined 2024 regulation and real-time reserve pool ($33.6M) by three times. This new market replaced the previous Forward Reserve Market which functioned alongside the Forward Capacity Market.

How does settlement work?

Real-time reserves settle in 5-minute intervals. A designated resource receives the real-time clearing price ($/MWh) times its designated capacity (MW) divided by 12 for 5-minute increments. Prices clear separately by reserve zone and product type. Resources that fail to respond when called face Pay-for-Performance charges rather than credits.

Regulation settles as a capacity clearing price for each MW available to follow AGC, denominated in $/MW-hr. A performance component adjusts the payment based on how closely the resource tracked its AGC signal each interval. The capacity price is the primary driver; the performance component adds or subtracts based on tracking accuracy.

DA A/S is a call option sale. The same structure applies to all four products (DA TMSR, DA TMNSR, DA TMOR, EIR). Each resource clearing day-ahead receives a credit at the clearing price, locked in and paid regardless of real-time outcomes. The strike equals the expected real-time Hub LMP for that hour plus a $10 adder.

That close-out charge offsets the energy margin the resource would have captured in a scarcity hour. A participant who would have earned $500/MWh selling into a spike instead pays back the spread, but collects option premium revenue all year.

How should batteries think about ISO-NE as a market for growth?

For battery operators/developers, registration is the first decision. A CSF can access regulation, but that market is worth less than 10% of potential energy arbitrage revenue. A BSF cannot access regulation until November 2026 at the earliest, but can participate in reserves and EIR.

Real-time reserve revenue is not recurring because most hours clear near $0. Value concentrates in a few annual scarcity events that coincide with peak energy prices and Payment for performance credits. A battery arbitraging in those intervals captures reserves and performance payments simultaneously.

EIR clearing revenue arrives day-ahead with certainty, but the risk is the close-out charge when real-time Hub LMP exceeds the strike. Participation negates the upside on energy and reserve margins in those intervals. A battery without the matching energy position (state of charge) is exposed.

Batteries already hold most of the regulation market. The day-ahead reserve layer offers further share, and BSF registration suffices. Early saturation in ISO-NE reflects a small market (93 MW) and colocated battery participation.