Energy storage is much more than just backup power. In Poland, since June 14, 2024, a new balancing market has been operating, opening opportunities for energy storage (BESS) owners to generate stable revenues from ancillary services. Grid services – FCR, aFRR, mFRR, and RR – are mechanisms through which your storage can earn money while helping the grid operator (PSE) maintain stability of the power system.
The key to maximizing return on investment is the revenue stacking strategy – combining revenues from different sources: ancillary services, Capacity Market, energy arbitrage, and cost optimization. Energy storage becomes an active market participant, generating revenues 24/7, even when not used to power your business.
In this article, we explain what FCR, aFRR, mFRR, and RR services are, how they work, what the technical and legal requirements are, how much you can earn, and what risks are associated with participating in the balancing market. We also present practical steps you need to take to start earning from ancillary services.
Note: Information in this article is educational and does not constitute investment or legal advice. Revenues from ancillary services are variable and depend on market conditions. Before making investment decisions, we recommend consulting with a professional advisor.
What are FCR, aFRR, mFRR, and RR Ancillary Services?
Ancillary services (also called balancing services) are mechanisms that help the transmission system operator (PSE) maintain balance between production and consumption of electricity and stable grid frequency at 50 Hz. When frequency deviates from the norm, it means there’s too much or too little energy in the system. BESS energy storage can respond instantly to these deviations by supplying or absorbing energy.
In Poland, there are four main types of balancing services that differ in activation time and operation:
FCR (Frequency Containment Reserve) – Frequency Containment Reserve
FCR, also known as primary control, is the first line of defense for the power system. When grid frequency deviates from 50 Hz, FCR devices automatically respond within 30 seconds, supplying or absorbing energy to stop the frequency drop or rise.
FCR operates fully automatically, without operator intervention. Energy storage monitors grid frequency in real-time and proportionally to the deviation supplies power (FCR-D, when frequency drops) or absorbs power (FCR-U, when frequency rises). Poland cooperates with other European countries within a common FCR market, increasing stability of the entire system.
Technical requirements: Full activation within 30 seconds, automatic control, continuous availability throughout commitment period (typically 4-hour blocks).
aFRR (automatic Frequency Restoration Reserve) – Automatic Frequency Restoration Reserve
aFRR, also known as secondary control, activates after FCR and aims to restore frequency to exactly 50 Hz and relieve primary reserve. aFRR responds to a control signal sent automatically by PSE’s system and reaches full power within 5 minutes.
Unlike FCR, which only stops frequency deviation, aFRR fully restores frequency to 50 Hz. aFRR can operate for longer periods (up to several hours) and is activated more frequently than FCR.
Technical requirements: Full activation within 5 minutes, automatic response to PSE signal, ability to maintain power for at least 30 minutes, compliance with technical requirements.
mFRR (manual Frequency Restoration Reserve) – Manual Frequency Restoration Reserve
mFRR, also known as tertiary control, is activated manually by PSE dispatcher and reaches full power within 15 minutes. mFRR is used for longer-duration imbalances and to relieve aFRR.
mFRR is less demanding technically than FCR and aFRR but also typically offers lower revenues. It’s a good option for storage systems that don’t meet strict FCR/aFRR requirements.
Technical requirements: Full activation within 15 minutes, manual activation, ability to maintain power for several hours.
RR (Replacement Reserve) – Replacement Reserve
RR is the slowest reserve, activated within 30 minutes to relieve mFRR and restore operational reserves. RR is used for long-duration imbalances and planned maintenance.
Technical requirements: Full activation within 30 minutes, ability to operate for several hours.
Capacity Market – Guaranteed Revenue for Availability
In addition to ancillary services, energy storage can participate in the Capacity Market – a mechanism that rewards generators and storage for being available to supply power during peak demand periods.
How does the Capacity Market work?
- Auction – PSE organizes annual auctions where capacity providers bid to supply power
- Obligation – Winners commit to being available during specified periods (typically winter peak hours)
- Payment – Providers receive fixed payment for availability (PLN/kW/year)
- Delivery – During delivery periods, providers must be ready to supply committed capacity
- Penalties – Failure to deliver results in financial penalties
Revenues from Capacity Market
As of 2024, Capacity Market prices in Poland range from 150-250 PLN/kW/year. For a 1 MW storage system, this means:
- Annual revenue: 150,000 - 250,000 PLN
- Monthly revenue: 12,500 - 20,800 PLN
- Predictable income: Fixed payment regardless of actual dispatch
The Capacity Market provides stable, predictable baseline revenue that can be combined with ancillary services and arbitrage.
Revenue Stacking: Maximizing Returns
The key to maximizing returns from energy storage is revenue stacking – combining multiple revenue streams:
Example Daily Schedule:
- 00:00-06:00 – Participate in FCR (low demand, high frequency volatility)
- 06:00-10:00 – Charge from cheap night-time electricity
- 10:00-14:00 – Charge from PV surplus (if available)
- 14:00-18:00 – Peak shaving (reduce demand charges)
- 18:00-22:00 – Participate in aFRR (evening peak, high prices)
- 22:00-24:00 – Energy arbitrage (discharge at high prices)
Annual Revenue Potential (1 MW system):
- FCR: 400,000 - 1,200,000 PLN
- aFRR: 200,000 - 600,000 PLN
- Capacity Market: 150,000 - 250,000 PLN
- Energy arbitrage: 100,000 - 300,000 PLN
- Peak shaving: 50,000 - 150,000 PLN
- Total: 900,000 - 2,500,000 PLN annually
Note: These are estimates. Actual revenues depend on market conditions, storage utilization, and operational strategy.
Technical Requirements for Market Participation
For FCR:
- Minimum 1 MW capacity
- Full activation within 30 seconds
- Automatic frequency-responsive control
- Continuous availability during committed periods
- Compliance with PSE technical requirements
- Certified metering and communication systems
For aFRR:
- Minimum 1 MW capacity
- Full activation within 5 minutes
- Automatic response to PSE control signal
- Ability to maintain power for at least 30 minutes
- Compliance with technical requirements
- Real-time communication with PSE
For Capacity Market:
- Minimum 2 MW capacity (or aggregation of smaller units)
- Ability to deliver committed capacity during delivery periods
- Compliance with certification requirements
- Metering and reporting systems
Legal and Regulatory Requirements
1. Grid Connection Agreement
You need a grid connection agreement with your distribution system operator (DSO) that allows bidirectional power flow and participation in ancillary services.
2. Balance Responsible Party (BRP)
You must either:
- Become a licensed BRP yourself (complex and expensive)
- Contract with an existing BRP or aggregator (recommended for most)
3. Certification and Prequalification
Before participating in FCR or aFRR, your storage must undergo:
- Technical tests to verify performance
- Prequalification by PSE
- Certification of metering and communication systems
4. Reporting and Settlement
You must:
- Report availability and performance to PSE
- Settle imbalances with your BRP
- Comply with market rules and regulations
Risks and Mitigation Strategies
Risk 1: Market Price Volatility
Description: FCR and aFRR prices fluctuate significantly based on supply and demand.
Mitigation:
- Diversify across multiple services (FCR, aFRR, Capacity Market)
- Use revenue stacking to reduce dependence on single market
- Consider fixed-price contracts with aggregators
- Monitor market trends and adjust strategy
Risk 2: Performance Penalties
Description: Failure to deliver committed capacity results in financial penalties.
Mitigation:
- Maintain robust monitoring and control systems
- Implement preventive maintenance programs
- Have backup capacity or insurance
- Work with experienced aggregator
Risk 3: Regulatory Changes
Description: Market rules and requirements may change.
Mitigation:
- Stay informed about regulatory developments
- Work with experienced legal and technical advisors
- Build flexibility into contracts and systems
- Participate in industry associations
Risk 4: Technical Failures
Description: Storage system may fail during committed periods.
Mitigation:
- Use high-quality, proven technology
- Implement redundant systems
- Maintain comprehensive insurance
- Have rapid response maintenance contracts
How to Start Earning from Ancillary Services
Step 1: Assess Your Storage System
- Verify technical capabilities (power, response time, duration)
- Check grid connection agreement
- Assess which services you can provide
Step 2: Choose Participation Model
Option A: Direct Participation
- Become licensed BRP
- Handle all market operations yourself
- Best for large operators with expertise
Option B: Through Aggregator
- Contract with experienced aggregator
- Aggregator handles market participation
- Best for most storage owners
Step 3: Prequalification and Certification
- Submit application to PSE
- Undergo technical tests
- Obtain certification
- Complete prequalification process
Step 4: Market Participation
- Submit bids through BRP or aggregator
- Monitor performance and availability
- Optimize revenue stacking strategy
- Comply with reporting requirements
Step 5: Ongoing Optimization
- Monitor market conditions
- Adjust bidding strategy
- Maintain system performance
- Maximize revenue stacking opportunities
Check Your Storage’s Revenue Potential
How much can your energy storage earn from ancillary services? Use our calculator to receive a free preliminary estimate.
