​Germany’s frequency markets are rapidly being reshaped by batteries. Across all battery-relevant services, TSOs procure around 4.5 GW of capacity. 90% of that is dedicated to automatic Frequency Restoration Reserve (aFRR).

When capacity is scarce, flexible providers earn strong returns. As more batteries qualify, those scarcity margins shrink and prices fall. We have seen this elsewhere: In Great Britain, frequency-response revenues fell by 73% in 2023 as supply overtook demand.

With the same pressure building in Germany it’s critical to understand how and when aFRR prices will compress. Batteries must be designed, traded, and financed for flexibility across markets — not just for the early-stage ancillary boom.

For any further information on this topic, reach out to the author — cosima@modoenergy.com.

Why this matters now: pre-qualified BESS is moving closer to total aFRR demand

Around 580 MW of battery capacity have currently pre-qualified for aFRR in Germany — about 30% of all operational BESS.

Total BESS capacity will reach 5.7 GW by the end of 2026. If just 35% of that fleet qualifies for aFRR, it would already be enough to meet the 2 GW of capacity procured by German TSOs.

As more batteries enter the market, competition will rise and prices will come under pressure.

This is a familiar pattern in frequency services. In Great Britain, the turning point came at the end of 2022.

Lessons from Great Britain: oversupply in frequency services drove prices towards the battery cost floor

In 2022, batteries in Great Britain earned over £150k/MW/year. By 2023, revenues had fallen to around £50,000/MW/year.

The drop followed an oversupply of frequency capacity, which pushed clearing prices lower across all services.