Market-based procurement of ancillary services

The Bundesnetzagentur (Federal Network Agency) is establishing a further basis for ancillary services delivered by renewable energy installations, storage facilities and consumers. These services help to keep the electricity grid stable and secure.

Windräder und Überlandleitungen auf einem Feld.©

On the way to a climate-neutral electricity supply, the structures for electricity generation and consumption are fundamentally changing in our electricity system. System stability of the electricity grids plays an overarching role, since secure and robust grid operation must be ensured at all times.

So far, the ancillary services needed for the system stability of the electricity grid operation have mainly been provided by conventional power stations. In view of the conversion of the electricity supply system, more and more of these services will have to be provided by other generation, storage and consumption facilities. There are three ways (three “pillars”) to provide ancillary services: obligatory technical requirements to be met by the facilities; the market-based provision of services by facilities; the grid resources of the grid operators.

Three pillars for the provision of ancillary services

In the second pillar, market-based procurement, the idea is that ancillary services are purchased transparently and on a non-discriminatory and market-driven basis. To this end, the Bundesnetzagentur, as the competent authority, has now launched the third and, for the time being, last “Procedure for the provision of ancillary services from generation, storage and consumption facilities”.

The Bundesnetzagentur has already set up a market-based procurement system for the black start capability ancillary service. A black start entails the capability of a power station to get itself going without outside assistance and independently of the electricity grid, i.e. even in a blackout.
The reactive power ancillary service helps regulate the voltage; here, the procurement concept will probably be published in the first quarter of 2024.

The launch of consultations on 29 September for the market-based procurement of inertial reserve (capacity reserve of energy installations which is available at short notice) needed for frequency stability will create the framework for a market-based provision of this service.

This will provide an incentive for innovations by generation, storage or consumption facilities to make a greater contribution to system stability. The deadline for comments by the market players is 3 November 2023.