How would a dispatch optimization of a battery delivering ancillary services perform in Sweden in 2024?

To ensure that the electricity system is always in balance, transmission system operators such as Svenska kraftnät and Fingrid purchase various types of ancillary services. A year ago, the ancillary service FCR-D — which aims to maintain frequency during rapid disturbances — was of great interest to Swedish battery owners due to the high revenue levels. Since the summer of 2024, the price of FCR-D has fallen, primarily due to a rapid increase in batteries in the power system. As a result, the ability to optimize between multiple services has become increasingly important to ensure good returns.

At CheckWatt, we continuously model how optimal economic operation of a battery might look, both to prioritize development work and to create an understanding of what revenue might look like when batteries are operated optimally. In the development of our services, the focus is always on achieving as close to optimal control as possible.

In this article, we share the results from a model that optimizes the use of a battery based on prices for all ancillary services. Note that the examples assume perfect price forecasting, which is not achievable in practice. They should therefore be viewed as indications of potential revenue rather than actual outcomes. The example also assumes that the battery can deliver all ancillary services; currently, batteries connected to CheckWatt’s virtual power plant deliver FCR-D and FCR-N. Larger facilities with a local frequency meter also deliver FFR. Since December 2024, CheckWatt has also started pre-qualifying batteries for mFRR and aims to start with aFRR in 2025.

The example also does not take into account additional revenue from participating in electricity trading markets such as the day-ahead and intraday markets. It also does not consider local flexibility deliveries (which, in some geographical locations today, can provide a significant contribution to a battery’s economy) or services locally within the building, such as increasing solar self-consumption.

In the examples, we have looked at two different battery systems: one with a capacity of 1 MW / 1 MWh and another with 1 MW / 2 MWh. Revenue is proportional to the size of the system, meaning that for a system with a capacity of 10 kW / 10 kWh or 10 kW / 20 kWh, the potential revenue would be approximately 1 percent of the results below. The only ancillary service that generally cannot be delivered by small systems (under 50 kW) is FFR, as it requires a local frequency meter which generally is not worth the extra cost for small systems.

Dispatch optimization of ancillary services for a 1 MW / 1 MWh battery in 2024

Throughout 2024, the revenue for a 1 MW / 1 MWh battery was dominated by FCR-D. By zooming in on the developments month by month, a shift occurred during the summer when FCR-N took over from FCR-D as the service that contributed the most to monthly revenue. From September onward, there was relatively active optimization between several different ancillary services, with mFRR becoming the most profitable service in December.

However, the optimization does not take into account the increased costs for things like grid peak tariffs, which arise due to more energy-intensive ancillary services such as mFRR, aFRR, and FCR-N. In practice, this means that the annual earnings from a battery that has only delivered FCR-D are relatively close to those of a battery that has been operated optimally.

Revenue for the respective ancillary service and operational optimization for 1 MW/1 MWh battery in 2024

Bar chart comparing potential revenues from individual ancillary services vs. full-service optimization for a 1 MW / 1 MWh battery system in electricity price area 3. Values are shown in thousand SEK after fees and bidding margins. — Comparison of potential revenue from individual ancillary services and an optimization of all ancillary services for a 1 MW / 1 MWh battery system in SE3 in Sweden. The bars represent the amount in thousands of SEK after fees to CheckWatt, installation partners, and balance responsible party, as well as after margin in bidding.

Revenue per month for operational optimized battery of 1 MW/1 MWh in 2024

Bar chart comparing monthly revenues and distribution of each ancillary service for a 1 MW / 1 MWh battery system in electricity price area 3. Bars indicate thousand SEK after fees and bidding margins. — Potential revenue per month and distribution of each ancillary service for a 1 MW / 1 MWh battery system in SE3 in Sweden. The bars represent the amount in thousands of SEK after fees to CheckWatt, installation partners, and balance responsible, as well as after margin in bidding.

Optimized delivery of ancillary services for a 1 MW / 2 MWh battery in 2024

The main difference between a 1 MW / 1 MWh battery and a 1 MW / 2 MWh battery is that the latter has a greater ability to extract value from more energy-intensive ancillary services such as FCR-N, aFRR, and mFRR. All of these services require the battery to be able to deliver power for at least one hour, compared to FCR-D, which has a duration requirement of 20 minutes. The effect of this can be seen in the calculation for the full year, where FCR-N is the service generating the highest revenue, and mFRR, from October onwards, is the service contributing to the largest share of revenue. The optimization for the 1 MW / 2 MWh battery does not take into account the increased costs for higher grid peak tariffs that arise from more energy-intensive ancillary services.