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What Are Balancing Services And How Can Businesses Generate Revenue?

Balancing Services are a short-term response to even out the fluctuating demands of the power grid. As the UK’s energy mix becomes more diverse and the share of renewable energy increases, the need for National Grid to use Balancing Services to prevent disruption similarly grows.

This can present new revenue opportunities for many businesses through engaging with these Balancing Services, known as Demand Side Response. However, which aspects of National Grid’s balancing efforts you can engage with, and the amount of revenue available for doing so, will vary depending on the nature of your operations and, crucially, how quickly you are able to respond to changing grid conditions.

Here, we explain which Balancing Services exist and what requirements are in place for a business to be able to engage with them.

Frequency Services

What are Frequency Services?

Frequency services are used to maintain the Grid’s alternating frequency of 50Hz, with a mandate in place that this system frequency must be maintained give or take 1% at all times. To help maintain this, end users are paid in return for rapidly increasing or decreasing their demand to help keep the grid stable.

Several of these mechanisms are currently in place. These are Dynamic Containment, Dynamic Moderation and Dynamic Regulation

What is Dynamic Containment?

Deployed after a fault has occurred, Dynamic Containment (DC) is the fastest acting frequency response. DC is growing increasingly important as our electricity system experiences lower inertia and more numerous losses, making the task of keeping frequency as close to 50Hz as possible increasingly difficult.

National Grid runs tenders for DC every day, with end users able to specific which four-hour block they are able to participate in. This scheme requires the quickest from participants, within one second, but offers a better price for your service in response for this speed.

What is Dynamic Moderation?

Dynamic Moderation (DM) is used to manage sudden large imbalances to keep them within operational limits. Providers help to balance demand and generation during periods where there are sudden, unpredicted imbalances, such as during an erroneous wind forecast.

What is Dynamic Regulation?

This is a pre-fault service that is used to slowly correct small but continuous deviations in frequency. Effectively, DR works to continually regulate frequency towards the target of 50Hz.

All three of these dynamic frequency services, introduced between October 2020 and April 2022, are managed through National Grid’s Single Markets Platform (SMP), where end users will need to register to participate. The SMP launched in February 2022, and is designed to facilitate National Grid more easily onboarding new and existing participants to the DC, DM and DR services.

Firm Frequency Response

What is Firm Frequency Response (FFR)?

Firm Frequency Response (FFR) is used by National Grid to rapidly increase or reduce demand to help balance the grid and avoid power disruption. FFR uses pre-approved assets to balance sudden peaks or troughs in demand, and the owners of those assets receive payments in return, even if their particular asset is never called on to participate.

Businesses with the inherent flexibility to their energy use are best suited to FFR, allowing them to respond rapidly to the requirements of the grid. Battery storage and on-site generation both lend themselves well to this, although other systems including heating and cooling, freezers and generators are also suitable.

Short Term Operating Reserve (STOR)

When National Grid needs to call on additional power to manage demand on the system, it will often call upon additional capacity that has been secured ahead of time though the use of STOR. Participating businesses need to be able to provide at least 3MW of generation or demand reduction to help balance supply and demand, within 20 minutes of being called upon.

STOR is procured through a daily auction that takes place one day ahead of delivery. Unlike FFR, end users won’t receive payments simply for being available, instead only receiving payments when they are called upon to increase generation or reduce demand within a pre-agreed window of commitment.

How can a battery energy storage system generate revenue?

For end users with battery energy storage systems (BESS) in place, the range of different balancing services available means that you can generate additional revenue from your battery system in different ways, or find a mechanism that fits best with your current operations and energy use. The ability of a BESS to rapidly supply power back to the grid, or to draw off and store it, makes them ideal for many of the balancing mechanisms available.