How Demand for Ancillary Services Has Evolved - and What's Driving It

A Structural Shift in Grid Balancing

The demand for ancillary services has evolved significantly as European electricity systems decarbonize. The retirement of synchronous generation (nuclear, and increasingly coal) and the growth of variable renewables have fundamentally changed how grid stability is maintained.

Conventional power plants provided inherent inertia through their rotating mass, physically resisting frequency changes. As these plants are replaced by inverter-based renewables, the grid becomes more sensitive to imbalances - and the role of procured balancing reserves becomes more critical.

Technological Drivers: The Energy Transition's Impact on Grid Stability

Germany's target of 215 GW solar and 115 GW onshore wind by 2030 has two direct consequences for balancing: larger installed capacity means larger absolute forecast errors, and simultaneous solar feed-in creates steep generation ramps at sunrise and sunset. Meanwhile, conventional plants are leaving the market while new technologies - batteries, EVs, heat pumps, electrolysers - are entering as both flexible loads and potential reserve providers. As the Grünbuch Regelreserve notes, balancing services will increasingly need to be provided by these market-native technologies.

Growing Volumes, Changing Sources

In Germany, the total volume of procured FCR has been broadly stable - with a moderate increase in 2026 - but the composition of providers has shifted dramatically. Battery storage systems now provide a significant share of FCR capacity, displacing conventional gas and pumped hydro plants that previously dominated.

For aFRR, both capacity and energy volumes have grown as renewable forecast errors introduce more frequent deviations from planned schedules. From autumn 2026, the TSOs will add 15-minute capacity products alongside the existing 4-hour blocks (approved by the Bundesnetzagentur in October 2025) – a step towards finer resolution and more dynamic participation by flexible assets such as batteries.

Future Demand: What the TSOs Expect

The German TSOs’ Grünbuch Regelreserve 2030 and the follow-up Weißbuch identify key drivers on both sides. Demand is expected to increase due to renewable expansion, a potential bidding zone split, and the growth of E-mobility and self-optimisation. Demand could be partially offset by passive balancing effects through the MARI* and PICASSO* platforms and regulatory convergence on dimensioning rules. On balance, the TSOs expect a net increase in reserve demand by 2030 - pointing to a sustained market opportunity for flexible, well-integrated assets.

What This Means for Asset Owners

The structural growth in balancing demand creates a sustained revenue opportunity for flexible assets. However, capturing this opportunity requires infrastructure that can handle the increasing complexity of multi-market participation, real-time dispatch, and evolving regulatory requirements. Assets that are well-integrated and reliably controllable are best positioned to benefit from this trend.

*MARI is the European mFRR platform, PICASSO is the aFRR equivalent - both reduce procurement volumes via cross-border netting.

Sources: Grünbuch Regelreserve 2030, Weißbuch Regelreserve 2030, BNetzA