For battery energy storage systems operating in ERCOT, Ancillary Services made up 87% of revenues in the first half of 2023. ERCOT procures these services in the Day-Ahead Market, and they perform two primary functions:
- They keep grid frequency at around 60 Hz.
- They provide additional dispatchable capacity, when necessary.
There are four main Ancillary Services that ERCOT procures:
- Regulation (Up and Down)
- Responsive Reserve Service (further split into Primary Frequency Response, Under Frequency Response, and Fast Frequency Response)
- ERCOT Contingency Reserve Service
- Non-Spinning Reserve Service
Ancillary Services can be provided by generation, load, or storage resources. These resources then increase or decrease the supply of electricity in minutes (or even seconds), according to the needs of the grid.
But how do these services work? What problems does each solve? And what requirements do resources need to meet in order to provide them?
(Head to the bottom of this article to see our handy cheat sheet.)
Qualifying to provide Ancillary Services
Each Ancillary Service will have its own qualification requirements. The Qualified Scheduling Entity (QSE) must ensure that its resource can meet these requirements, in order for that resource to participate in any given Ancillary Service.
In general, these qualifications will require the resource to prove one or more of the following:
- It can begin deployment of the service within a certain timeframe.
- It can sustain deployment for a specified minimum length of time.
- It is capable of changing its output, as per the needs of the service.
- It has the requisite telemetry capabilities to accurately report data.
To qualify for Ancillary Services, the QSE should coordinate with the ERCOT Ancillary Services team, and the ERCOT Control Room team.
Offering to provide Ancillary Services
Day-ahead Energy and Ancillary Service awards are co-optimized for the least cost solution. As mentioned above, ERCOT procures all of its Ancillary Services in the Day-Ahead Market.
The Qualified Scheduling Entity (QSE) for any given resource can offer capacity into the Ancillary Services it is willing to provide, alongside its Energy offers, for each hour of the day.
The QSE can submit multiple individual ‘offer curves’ simultaneously - outlining separate prices at which they are willing to provide specific capacities of Energy and/or particular Ancillary Services.
ERCOT then awards contracts to resources who have submitted offer curves - based on the best-priced solution across all services, and in order to meet the needs of the grid for the following day.
What does each Ancillary Service do?
Ancillary Service providers (resources that are awarded contracts to ‘carry’ - as in, ‘carry out responsibility for’ - these services) are required to respond when certain conditions are met.
- This might be when frequency drops above or (more typically) below a certain level.
- Alternatively - and particularly in the case of slower-acting, longer-duration services (ECRS and Non-Spin) - it might be when there are concerns about available capacity.
Sometimes this is automated, and sometimes ERCOT manually calls on providers to act.
Battery energy storage systems are particularly suited to providing Regulation and Response Reserve - because those services require very fast response, and have shorter maximum durations.
ECRS and Non-Spin are more suited to technologies that can provide power for longer durations, and are available to assets with longer ramp times. That said, a number of batteries have still provided ECRS since its launch in June.
Want to know more about which Ancillary Services were particularly lucrative for batteries in the first half of 2023? Just head here.