752 REgulation and Market Dedign Preven... Energy Storage

C5
Electricity markets
and regulation
Regulation and market design

barriers preventing to capture
all the value from fast and
high-location-freedom energy
storage
Reference: 752
January 2019
Regulation and market design barriers preventing to capture all the value
from fast and high-location-freedom energy storage
Regulation and market
design barriers preventing
to capture all the value from
fast and high-location-
freedom energy storage
WG C5.25
Members*
D. GAME, Convenor FR C. PACHE, Secretary FR T. SAWA JP

U. BACHHIELS AT A. BANNER FR M. SCHUDEL FR
F. BERNARD NL K. BHATTACHARYA CA N. SOUZA E SILVA PT
B. BÖCKER DE M.-T. CAMPBELL GB B. VANDERWAAL AU
T. CAPUDER HR R. CUNHA-PEREZ BR L. VILDE GB
C. DORNELLAS BR V. DUSSARTRE FR J. WRIGHT ZA
E. ELA US J. I. DE LA FUENTE LEON ES S. SAXENA IN
J. GING IE A. HAQUE CA T. SLOANE NL
S. LINDER CH S. LIBRATTI IT A. TACCOEN FR
C. LUEKEN NL G. OLGUIN CL A. VENKATESWARAN US
D. PUGLIESE IT R. PASTOR PT M. VILLAVICENCIO FR
I. ROSE AU M. SAGUAN FR
* List of active members and observers
Copyright © 2019
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ISBN : 978-2-85873-454-2
ISBN : 978-2-85873-454-2
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Executive summary
This document is the result of a collaborative work to identify regulation and market design barriers
preventing to fully capture the value from “new” energy storage technologies.
The considered storage technologies have the particularity to be faster (ramping rate and response
time) and to have higher-location-freedom (installation possible almost everywhere on the grid) than
conventional power generation assets. In this document, we call these technologies “FLES” for Fast
high-Location-freedom Energy Storage. For example, electrochemical batteries, flywheels and
vehicle2grid are in the scope. As current regulation and market design were designed consistently with
conventional generation, before the emergence of FLES, they may fail to capture the whole potential of
value of FLES.
In this report, the Working Group delivers a theoretical analysis of potential value streams and barriers,
together with a practical inventory for 14 different countries. Overall, the Working Group outlines that
regulation and market design could be improved by following these four main recommendations:
1. There should be a clear definition of the status of storage, either generation,
consumption, both or a specific status. The absence of status or an unclear status is inhibiting.
2. Ancillary services1 should be defined in a market-based way without technological

discrimination. Not only, should existing ancillary services be opened to storage (no
exclusivity for conventional generation). But also, the mandatory provision of some services
from conventional generation should be avoided.
3. In a context of evolving system needs towards faster system services, rethink the
specification of existing ancillary services and consider new ones in order to take
advantage of fast new storage technologies. For example, a power system with low inertia
may consider faster frequency containment response than the service usually requested from
thermal generation.
4. Finally, in order to take advantage of the congestion management capability of high-

location freedom new storage technologies, the coordination of grid and flexibility
resources including storage should be enabled. In case of separate entities operating
network assets and storage assets, the interface between these entities should address both
long-term risk (the congestion value collapses if the grid operator finally plans a grid
reinforcement), and operational risk (the firmness of the availability and performance of the
storage-based congestion service is critical for the grid reliability).
Further work may be interesting for the power-system community, especially:

- Extend the survey to more countries,
- Update this work on a yearly basis,
- Provide case studies of countries that have improved their market design and regulation in order
to better capture the value of FLES.
Readers of this report are kindly invited to give their feedback on this report, to notify their interest for
future work, and to declare their candidate contributions to future work. Please proceed to: link to the
form2.
1
“System services are the services provided by the system operator to all users of the network, while ancillary services are the
services supplied by some of the users of the network to the system operator. To provide its system services, the system
operator usually buys ancillary services from generators and consumers.” (Rebours et al. 2007, p.352).
2
Full link: https://docs.google.com/forms/d/e/1FAIpQLSehmLfx9GoqJewX-ySsA2gN1sXH5f4utm4JImSolVNFWIEG7w/viewform?usp=sf_link
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Contents
Executive Summary ............................................................................................................ 5
1. Introduction................................................................................................................ 9
2. How to read this report............................................................................................ 11
3. Flexibility needs of power systems ........................................................................ 13

3.1 flexibility for the forecasted balancing of load-generation (energy and capacity markets) .............. 13
3.2 flexibility for the real-time balancing of load-generation (frequency regulation)............................... 14
3.3 flexibility for stability and power quality ............................................................................................... 14
3.4 flexibility for the management of transmission and distribution flows .............................................. 14
3.5 flexibility for emergency modes ............................................................................................................. 15
4. List of technically mature value streams and potential barriers .......................... 17

4.1 peak residual demand reduction ............................................................................................................ 17
4.2 ramp support............................................................................................................................................ 18
4.3 frequency regulation service .................................................................................................................. 19
4.4 fast frequency containment response ................................................................................................... 20
4.5 asymmetric frequency response in synergy with other services........................................................ 21
4.6 value of frequency regulation capacity with limited duration.............................................................. 21
4.7 preventive transmission congestion relief ............................................................................................ 22
4.8 curative transmission congestion relief ................................................................................................ 22
4.9 grid congestion based location of balancing-storage.......................................................................... 22
4.10 value of investment deferral (t&d) .......................................................................................................... 23
4.11 black start capabilities ............................................................................................................................ 23
4.12 service restoration plan – grid resilience .............................................................................................. 24
4.13 load/generation shedding schemes ....................................................................................................... 24
4.14 value of simplifying technical requirements on generation plants ..................................................... 25
5. List of future value streams .................................................................................... 27

5.1 synthetic inertia (frequency rate of change) ......................................................................................... 27
5.2 damping oscillations ............................................................................................................................... 27
5.3 synchronisation / grid-forming ............................................................................................................... 28
6. Analysis of significant and recurrent barriers ....................................................... 29

6.1 unclear status .......................................................................................................................................... 29
6.1.1 grid tariff inadequacy ......................................................................................................................... 29
6.2 bundled ancillary services and conventional generation .................................................................... 29
6.2.1 provision of mandatory services from conventional power plants ...................................................... 29
6.2.2 ancillary services not opened to fles .................................................................................................. 29
6.3 barriers related to “fast” characteristics of fles.................................................................................... 30
6.3.1 inadequacy of existing regulations or market designs ....................................................................... 30
6.3.2 define new ancillary services ............................................................................................................. 30
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6.4 barriers related to “high-location freedom” characteristics of fles .................................................... 30

6.4.1 ownership limitation ........................................................................................................................... 30
6.4.2 inexistence of mechanisms for reliable operation of fles for congestion management ...................... 30
6.4.3 investment coordination problems between network and alternative solutions .................................. 31
7. Conclusion ............................................................................................................... 33
APPENDIX A. Country-by-country analysis of active barriers……………………33
Figures and Illustrations

Figure 1 – Scope of the WG C5.25 ................................................................................................................ 9
Figure 2 – List of flexibility needs ................................................................................................................ 13
Figure 3 – Technically mature value streams for each flexibility need .............................................................. 17
Figure 4 – The California Duck Curve (net load 2012-2020) ........................................................................... 18
Figure 5 – Battery-based energy storage array vs. traditional gas combustion turbine providing ramp support ... 19
Figure 6 – Dynamic simulation of the loss of 3GW of generation in a 150GW system (like continental Europe). A
very similar stabilization curve can be obtained with less capacity, when invoking fast frequency regulation.
(Source: RTE) ............................................................................................................................................ 20
Figure 7 – Asymmetric frequency response from batteries ............................................................................. 21
Figure 8 – Impact of damping control on frequency oscillations (Source: Sandia National Laboratories) ............. 27
Tables
App Table A.1 Summary table of potential barriers ........................................................................................ 35
App Table A.2 Results from the country-by-country analysis of active barriers ................................................. 36
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1. Introduction
This Working Group (WG) is dedicated to the value emerging from new storage technologies. However
we should keep in mind that this is only one angle of a much broader issue: the challenge of developing
the flexibility of power systems, in order to sustain the integration of a high share of renewable energy
sources.
Disruptive technology features are susceptible of revealing limitations of existing regulations and
markets, simply because those were designed before these features even existed at industrial scale. In
fact, “new” storage technologies bring up two disruptive features:
- Fast: high ramping rate allowing for maximum power response in less than one second
- High-location-freedom: possibility of installation at most of the nodes of the grid, (unlike for
example pump hydro storage), enabling to provide very local services. Note that this location
freedom mostly relates to the investment stage. Moving the FLES location during its life time
may be possible under a certain cost.
This WG is dedicated to energy storage technologies that are faster (ramping rate and response time)
and/or have higher-location-freedom than conventional power generation assets, yet with sufficient
maturity to be expected operational by 2030. We will refer to such technologies as “FLES” for Fast,
high-Location-freedom, Energy, Storage. For example, electrochemical batteries, flywheels and
vehicle2grid are in the scope.
All the needs of power systems that can be addressed by FLES are considered. It does not mean that
FLES should replace other flexibility sources, however the provision of these services by other flexibility
sources are not addressed. Therefore the important issue of the “optimal mix” of flexibility is not tackled
in this work. The following diagram summarizes the scope of this Working Group:
FLEXIBILITY SOURCES
Flexibility New Storage
Flexibility of
of Non- Demand- Grid (batteries,
Renewable
Renewable Response Flexibility flywheels,
FLEXIBILITY Generation
Generation
CAES, V2G…)
NEEDS
Forecasted
A balancing
Real-time
B balancing
This WG does not say that FLES should replace other
C5.25
flexibility sources !
C Stability &
power quality It simply does not address the competition amongst
flexibility sources, and therefore does not aim at
designing the “optimal mix” of flexibility.
D Management
of grid flows
Emergency
E Modes
Figure 1 – Scope of the WG C5.25
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2. How to read this report

This document aims at identifying regulation and market design barriers that prevent to capture all the
value from FLES. It is organized in four sections which follow the steps implemented in the Working
Group.
The first section details the different flexibility needs that are required by the system. They are
referenced by letters from A to E according to Figure 2Figure 2 (see Section 3).
After specifying what are the flexibility needs of power systems, a list of related potential value streams
and barriers for FLES has been drawn. Two groups have been identified: technically mature value
streams, which may face regulatory and market design barriers (they are the ones considered in the
country-by-country analysis), and future value streams that are in an early stage of technical
development, if any. Technically mature value streams are listed in Section 4. There is one paragraph
for each value stream including references to the relevant flexibility needs, the description of the value
stream in terms of electro-technical properties rather than country-specific service, and the list of
potential barriers. Potential barriers are referenced according to the number of the value stream they
are related to. Section 5 presents the value streams which are still at an early stage of technical
development. Their barriers are mostly technical and it is too soon to identify regulatory and market
design barriers though a future value stream may be expected.
Then, the different participants of the Working Group were asked to identify which regulatory and
market design barriers of the technically mature value streams were active in their country. Answers
were collected for 14 countries: Australia, Brazil, Canada, Croatia, France, Germany, Italy, Ireland,
Japan, Portugal, South Africa, Spain, Switzerland and the United States. The detailed answers can be
found in APPENDIX A. Based on this practical inventory, the most significant and recurrent barriers were
extracted and summarized in Section 6. This lead to the four main recommendations presented in the
executive summary and in the conclusion.
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3. Flexibility needs of power systems

Different reports were used to prepare this summary, one of the most important one being “Energy
Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide - A Study for the DOE
Energy Storage Systems Program” (http://www.sandia.gov/ess/publications/SAND2010-0815.pdf).
Note that behind the meter flexibility3 is out of scope, thus it is not presented in this report.
The different needs presented in this section may be summarised as follows:
Figure 2 – List of flexibility needs
3.1 Flexibility for the forecasted balancing of load-generation (energy

and capacity markets)
This covers all the needs of flexibility for the balancing of load and generation, that can be forecasted
and for which solutions can be committed up to one hour (typically) before real-time, in a deterministic
assumption (neglecting forecast errors). Several applications of flexibility and corresponding value may
be distinguished:
▪ Economic generation: use the flexibility of generation plants, the time-shifting capacity of
storage and demand-response in order to minimise the cost of generation (avoid using
marginally expensive peak generation units, avoid wasting marginally cheap renewable energy).
This problem may be modelled as the placement of “flat energy blocks” defined at a rough time
resolution (15 minutes or more), over a large geographical zone (typically a state, a country or
larger). Depending on the country regulation, this optimisation is performed centrally or relies
on market arbitrage.
▪ Supply capacity: avoid investment in peak generation capacity, as a corollary of the previous
point.
3
Behind the meter storage is considered as part of the Demand Response flexibility sources, thus it is not covered by this work.
13
▪ Ramping: anticipate the rate of change of the net load level, in order to reduce flat
the mismatch of the committed generation profile and the forecasted load profile. energy block
This reduces the need of flexible reserves for real-time balancing (3.2), which
could be important in systems exposed to high ramping. This may be modelled
as the placement of “ramping energy blocks” (as illustrated). ramping
energy block
3.2 flexibility for the real-time balancing of load-generation (frequency

regulation)
This covers all the needs of flexibility that are necessary, in the last hour before real-time (typically), in
order to react to the mismatches and forecast errors in supply and demand. This consists in producing
or consuming active power in response to a frequency deviation from its reference value (typically 50Hz
or 60Hz). In this document, let us name this general purpose “frequency regulation”.
This purpose is usually implemented in several services, often characterised by different reaction times
but also different technical features. The list and definition of services are country-dependent. For
example, we have:
▪ in Europe : “frequency containment reserve”, “frequency restoration reserve”, “replacement
reserve”, ordered from short to long reaction times.
▪ in USA : “regulation reserve”, “primary or contingency spinning/non-spinning”, “secondary or
supplemental reserve”, “responsive reserve”.
3.3 flexibility for stability and power quality

This covers all the needs of flexibility required for the real-time stability and power quality, other than
frequency regulation (3.2) and management of flows (3.4):
▪ Voltage regulation: production or consumption of reactive power to keep voltage within
acceptable ranges.
▪ Synthetic inertia: controlling frequency rate of change.
▪ Synchronisation: permanent frequency source and synchronism source. Today this is “naturally”
provided by the electromechanical coupling of synchronous generators. In the future, it may be
actively provided by advanced grid-forming control strategies implemented on distributed
power-electronics units of storage installations (see MIGRATE project 4).
▪ Power quality: compensating for electrical disturbances such as very short voltage spikes or
dips, longer voltage sags or surges, unstable voltage, low power factor, harmonics...
▪ Damping of oscillations. This includes frequency oscillations across synchronous zone (typically
from 0.1 to 1.0 Hz oscillations), damped today by Power System Stabilisers implemented on
rotating generation. In the future this could be handled by power-electronics control. Also, in
the future, power-electronics device may induce new types of oscillations, potentially with much
higher frequencies, probably to be tackled by power-electronics stabilisers.
3.4 flexibility for the management of transmission and distribution flows

▪ Congestion Relief: All means of influencing power flows with the effect of diminishing
congestions. Preventive methods aim at resolving congestions during the operational planning
phase, while curative methods aim at resolving unexpected congestions occurring after a fault
in real-time. Note that curative mode requires a short response time.
 Non-costly remedial actions: topological changes, phase-shifting transformers, etc.
 Costly remedial actions (unless actively coordinated to keep neutral balance): producing
or consuming active power at very specific locations for the purpose of diminishing the
congestion. This may rely on well-located flexible RES, well-located flexible demand-
response, well-located storage.
▪ Upgrade Deferral (or avoid investment in lines): This point and the previous one are corollaries.
For this purpose, being potentially movable and having a short development time (compared to
4
MIGRATE (Massive InteGRATion of power Electronic devices): European research project to assess the needs for active
synchronism and develop grid-forming solutions (https://www.h2020-migrate.eu/)
14
development time of lines) are valuable, as they bring more reactivity and flexibility to the grid
development, which has to cope with in an increasingly uncertain environment 5.
3.5 flexibility for emergency modes

Recover from complete black-out, recover from major failure (loss of synchronism, partial black-out),
or emergency measures just before imminent major failure. Non exhaustive list:
▪ Black-start: Black start is an ancillary service that is procured for power system restoration after
a complete or partial outage. The system black start capability is the sum of real power
generation capabilities over all units in the power system minus the startup power requirements
and minus the units that are kept for grid-forming. It is important that, during system
restoration, the available system generation capability is maximized.
5
The “option value” of FLES corresponds to the total cost avoided by adding storage to the panel of grid planning solutions.
15
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4. List of technically mature value streams and

potential barriers
This section lists the value streams that are technically mature, but may face regulatory and market
design barriers. It should also be noted that all the value streams related to emergency flexibility needs
may not be economically viable due to the low frequency of occurrence and the high stand-by cost of
FLES. Thus, dedicating FLES only to emergency modes may not make economic sense. More generally,
eonomic viability of FLES may be an issue in many cases, especially under a unique service business
model. However, if a large set of FLES can be aggregated and used for multiple services, there may be
potential value streams for these services too.
The identified technically mature value streams are organised by flexibility needs in Figure 3.
Figure 3 – Technically mature value streams for each flexibility need
4.1 Peak residual demand reduction

References of flexibility needs: A1, A2
Description of value stream:

Peak demand management could reduce the need for investments in peak generation capacity and/or
networks. See Section 3.1 for more details.
Using the time-shifting capacity of FLES could minimize the cost of generation, by avoiding using
marginally expensive peak generation units. However, some energy markets may not be adapted to
these kind of offers6.
Potential barriers:
6
Note that some spot markets already propose offers more adapted to storage resources. For instance, flexible “hourly” orders
are available in EPEXSPOT. They consist of 1-hour duration block orders with a fixed price limit, fixed volume, minimum
acceptance ratio of 1, and the hour in which the order is accepted is determined by an algorithm (not by the participant). For
more details, see https://www.nordpoolspot.com/globalassets/download-center/pcr/euphemia-public-documentation.pdf.
17
▪ V1.1 Grid tariff barrier. In some regions/countries, the structure of grid tariffs may not be cost
reflective, meaning that it does not exactly represent the cost and the value created by each
user at each time. For instance, energy based tariffs may not incentivize FLES for peak demand
reduction. Similarly, tariffs with a different fixed rate for power injection and withdrawal result
in a double charging of FLES which may not reflect their real cost.
▪ V1.2 In some regions/countries, spot markets are not adapted to storage offers resulting in
inefficiencies. For instance, some spot markets do not take into account time coupling
constraints.
4.2 Ramp support

References of flexibility needs: A3

The need for fast ramping grid resources is increasing due to higher penetrations of variable and
intermittent renewable energy in many electricity grids. For example, in a grid with high penetration of
solar energy, solar generation is ramping down just as evening load is ramping up, creating a steep
ramping requirement for the existing grid assets.
Figure 4 – The California Duck Curve (net load 2012-2020)7
A battery based energy storage system can provide twice the interconnection capacity as a ramping
resource. For example, a 100 MW array can charge at 100% capacity, moving at a constant ramp rate
to full discharge, which is a total of 200 MW of ramp over whatever time period is required by the grid.
The main challenge lies in the duration over which FLES can provide ramping capability because of its
limited energy.
7
Source: Officie of Energy Efficiency & Renewable Energy. URL: https://www.energy.gov/eere/articles/confronting-duck-curve-
how-address-over-generation-solar-energy
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Figure 5 – Battery-based energy storage array vs. traditional gas combustion turbine providing ramp
support
The need for ramping can be forecasted, and therefore could be represented and remunerated by
markets, thus reducing the need for reserves for the real-time balancing. A trade-off could be optimized
between forecasted balancing (A) and real-time balancing (B) of the need for ramping.
Potential barriers:
▪ V2.1 Though it can be forecasted, the need for ramping is not represented and valued by
markets. It is only managed in the real-time balancing. The limitation of existing market may
be either the absence of ramping product (only energy blocks), either energy blocks with too
gross time resolution (15 minutes energy blocks better approximate ramping than 1 hour energy
blocks). It is likely that the operation strategy of FLES could be better optimized with more
explicit ramping products.
4.3 Frequency regulation service

References of flexibility needs: B1

See Section 3.2 for the description of frequency regulation.
FLES have the capability to provide these services.
For instance, in Ireland the Grid Code, Connection Codes and other technical and commercial
requirements permit FLES to provide frequency control services, providing they can actively demonstrate
such capabilities through Operational testing. At the time of writing, there are 14 System Service
Products ranging from instantaneous Synchronous Inertial response to 8 hours out for Ramping Margin
capability, along with traditional Replacement Reserves for up to 24 hours. As there are currently no
telemetry and control requirements for plant less than 1 MW, such units would have to participate as
part of a Demand Side Unit or Aggregated Generator Unit.
Potential barriers:
▪ V3.1 No regulatory framework for the participation of FLES to this service 8. For example, TSOs
require the service to come from online synchronous resources, or to potentially last for an
indefinite duration, i.e. resources with limited duration cannot participate to this service.
▪ V3.2 Even if FLES can participate to this service, conventional power plants are required to
provide frequency regulation (mandatory service), reducing the need for additional service
provided by other means.
8
Note that there has been important regulatory evolutions on this point (e.g. US Order 841, SOGL of ENTSOE)
19
4.4 Fast frequency containment response


FLES can provide faster frequency containment response than conventional generation. In systems with
a lack of inertia and a low frequency nadir (minimum post contingency frequency), adding more MWs
of slow response or fewer MWs of fast response to the existing reserve induce the same frequency
nadir, as illustrated by the simulations hereafter. Therefore, a trade-off between fast (but expensive?)
and slow (but cheap?) reserve could be optimized, bringing down the overall cost of frequency
regulation.
Of course the potential of value to be gained is very much dependent on the context, especially on the
inertia of the system. Indeed, for a fixed amount of frequency containment capacity, the point of
minimum frequency goes down as inertia decreases. In systems with sufficient inertia, the value to be
gained could be simply zero.
Note that the UK, Ireland and Norway have already created such services. In Ireland, Frequency
Containment Reserves and System Service Products currently applicable include:
▪ Fast Frequency Response (FFR) spanning 2 – 10 seconds
▪ Primary Operating Reserve (POR) spanning 5 – 15 seconds
▪ Secondary Operating Reserve (SOR) spanning 15 – 90 seconds
▪ Tertiary Operating Reserve 1 (TOR1) spanning 90 – 300 seconds
▪ Tertiary Operating Reserve 2 (TOR2) spanning 5 – 20 minutes
▪ Replacement Reserve Synchronised (RRS) spanning 20 minutes to 1 hour
▪ Replacement Reserve De-synchronised (RRD) spanning 20 minutes to 1 hour
Each of the above is a separate product and remunerated as per associated tariff, which was derived
via consultation with participants and regulators.
Figure 6 – Dynamic simulation of the loss of 3GW of generation in a 150GW system (like continental
Europe). A very similar stabilization curve can be obtained with less capacity, when invoking fast
frequency regulation. (Source: RTE)
Potential barriers:
▪ V4.1 Only slow frequency containment reserve is specified and purchased by the TSOs.
▪ V4.2 Needs for fast frequency regulation are not always quantified by TSOs and markets do not
exist for this service.
▪ V4.3 Price paid for reserve does not depend on its response speed. Therefore, fast reserve that
is potentially more expensive is never used.
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4.5 Asymmetric frequency response in synergy with other services


Electrochemical batteries can provide asymmetric frequency response with a high synergy with other
“slower” services, as illustrated in these examples:
Figure 7 – Asymmetric frequency response from batteries
In example A, a 10 MW battery charging at set point 100% (for example for energy balancing) can
provide, at the same time, up to 20MW of “downward” frequency response.
In example B, the same battery charging at 70% (for example for congestion purpose) can provide up
to 17 MW of ‘downward’ response and 3MW of “upward” response.
Potential barriers:
▪ V5.1 Only symmetric frequency containment reserve is specified and purchased by the TSOs.
In consequence, in example A, the battery cannot participate in the frequency containment
reserve at all. In example B, the battery can engage only -3/+3MW in this reserve.
▪ Similarly, a fixed proportion between directions (e.g. ⅔ up reserve and ⅓ down reserve)
could be specified, thus restricting the technical range of possibilities of a battery.
4.6 Value of frequency regulation capacity with limited duration


FLES can participate to frequency regulation but only for a limited duration with respect to the
cumulative energy constraint.
Potential barriers:
▪ V6.1 In many countries in Europe, the frequency restoration reserve requires available capacity
over long lasting durations such as a whole week or even longer. This requires participants with
energy-constrained assets to aggregate many assets in order to provide the required
availability.
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4.7 Preventive transmission congestion relief

References of flexibility needs: D1, D2

In this application, storage units are dispatched in a manner that can directly address transmission
constraints on the grid through preventive action. The protocols of operating the storage units are
coordinated to ensure that storage can be dispatched either in a charging or discharging mode to
provide the right type of relief to the transmission grid (by charging if located upstream, by discharging
if located downstream).
This function requires an access to any congestion management mechanism, so that storage can
compete with other levers (e.g. auctions) in order to relieve congestion.
Note: If FLES were to be added to the list of redispatching levers that can be operated by TSO/DSOs,
the net zero energy balancing constraint some TSO/DSOs may face would apply to the whole set of
redispatching solutions and not only to storage used for this purpose.
Potential barriers:
▪ V7.1 Regulatory barrier: eligibility conditions for redispatching are not open to FLES.
▪ V7.2 Lack of mechanisms to value and allow the participation of FLES to congestion
management through a reliable operation.
▪ V7.3 TSO/DSOs may be forbidden by regulation to own storage in a multi-purpose setup: for
example, owning and operating a storage for grid purpose and renting the residual capacity to
market players allowing them to store/discharge their energy in this capacity.
▪ V7.4 TSO/DSOs may be forbidden by regulation to own storage in a grid-purpose-only setup,
even if the storage solution is technically and economically viable for this grid purpose.
▪ V7.5 There could be other barriers at the investment time scale. For instance, too high
interdependency between the TSO/DSO development plan and the storage operator business
model: on the one hand, the storage operator is exposed to a change in the grid development
plan which may kill the congestion value, on the other hand the TSO/DSO becomes dependent
of a single supplier in a single location.
4.8 Curative transmission congestion relief

References of flexibility needs: D1, D2

In this application, storage units are dispatched in a manner that can directly address transmission
constraints on the grid through curative action. The protocols of operating the storage units are
coordinated to ensure that any time a particular line or interface in the grid approaches the limits
(binding), storage is dispatched either in a charging or discharging mode to provide the right type of
relief to the transmission grid (by charging if located upstream, by discharging if located downstream).
As curative congestion management requires very fast response time, storage should able to provide
automated control to the system operator.
This function requires a guaranteed maximum delay for the activation of storage (in order to respect
the maximum overflow duration).
Potential barriers:
▪ V7.1 – V7.4 Same barriers than for “Preventive Transmission Congestion Relief”
▪ V8.1 There may be a lack of well-defined and organized services for TSO/DSOs to purchase a
congestion service from storage operators with a guaranteed fast activation process
4.9 Grid congestion based location of balancing-storage

References of flexibility needs: D1, D2, A2

Smartly localized and dispatched FLES can balance load and generation (flexibility need A) and address
grid congestion (flexibility need D) at the same time. Indeed, by a single charging or discharging profile,
22
FLES can provide both services simultaeously. Thus, there can be a very high synergy in comparison
with dedicated storage units providing these services separately.
In order to explain this synergy, let’s take a Germany-like example, in a future with even more
renewables. Assume a generation mix with a high share of renewables, so that high development of
daily storage is required for offer-demand purpose. Assume there is a North-South congestion in times
of high off-shore wind production in the North. Market-driven storage will charge at times of low prices,
which will often match times of high wind generation. Hence locating market-driven storage in the North
(rather than anywhere) will relieve partly the North-South congestion for no extra cost, other than the
localization choice.
Potential barriers:
▪ V9.1 Countries where regulation separates transmission and generation, and where there is no
incentive for the location of new generation or storage sites.
4.10 Value of investment deferral (t&D)

References of flexibility needs: D2

Sometimes in order to comply with N-1 condition, investments in new infrastructures such as lines and
power transformers are necessary, as they are the alternative that allows an effective network capacity
expansion. However, in some of these scenarios, FLES (or other resources) can be placed in specific
nodes of the network to release the network stress in case of marginal overloads, providing the precise
amount of additional flexibility for a short period of time (e.g. some hours). This is particularly relevant
in the cases where the overload occurs for a short-time and the load show a small growth rate that
would require a considerable investment to solve the problem at the time that it will happen only a few
hours a year.
Potential barriers:
▪ V10.1 Regulatory barriers are foreseen, mostly related to the ownership of the FLES.
▪ V10.2 Also market barriers are foreseen related to the operation of the FLES.
4.11 Black start capabilities

References of flexibility needs: E1

See Section 3.5 for the description of black start.
FLES, because it is controllable in active and reactive power, can offer reliable black start functionality
in the event of grid collapse.
The typical Black Start services agreement includes four components, which are anticipated to be
provided by FLES:
▪ Availability – compensation for making a generating unit available for the provision of black
start services
▪ Exercise – compensation for actual services provided during a black start event
▪ Training and testing – compensation for demonstrating and validating the ability of a resource
to provide black start services, and for participation in annual restoration training
▪ Capital cost recovery – compensation for capital cost and investment to enable units to become
black start capable.
The key driver for FLES as black start service is the duration it is required to supply black start power
in case of an emergency – the shorter the better for the storage-based business case. This may be the
case in a system with many RES as they would quickly connect to the system and help the FLES
regulating voltage and frequency (if there is wind or sun).
23
Black start is characterized by low-frequency utilization. All that is required is the setting aside of a
certain share of the charged energy for blackout emergencies and some controls for grid forming. The
battery is not fully discharged in a daily basis. Certainly, this application makes more sense only for
storage technologies in which there is very low self-discharge.
Potential barriers:
▪ V11.1 No regulatory framework and tariff for the participation of FLES to this service.
▪ V11.2 Conventional power plants may be required to provide their own black start protection
systems.
4.12 Service restoration plan – grid resilience


FLES can be used to support the Service Restoration Plans. The power system is always exposed to
severe contingency and catastrophic events that may lead to blackouts. FLES can participate in power
system energizing in the so-called Service Restoration Plans by reserving some power for these
contingencies. Several services could be provided:
▪ FLES can be located at strategic places in the grid to provide black start capabilities to more
than one generating unit. The protection and control might need some coordination between
the system operator, the power plant owner and the FLES owner.
▪ FLES can be used by the system operator to ease the load ramps during the recovery phase.
▪ FLES can help re-connect a zone by sending a synchronising signal in the case of systems with
large amounts of renewable energy sources. However, the use of FLES to provide this service
is still in an early stage of technical development. See “Synchronisation – Grid forming” value
stream for more details.
Potential barriers:
▪ V12.1 In some countries/regions, service restoration plans do not recognize the value of energy
storage.
▪ V12.2 In many countries black-start capabilities are required from a number of power plants
not recognizing the possibility of providing this service from FLES located in the grid.
4.13 Load/generation shedding schemes


Load (resp. generation) shedding schemes are used in some systems by operators after a reliability
issue, such as a sudden loss of generation or a power line resulting in a rapid decrease of frequency
(resp. an increase of frequency above a given threshold), once no better solution is available and to
avoid more severe events. Load shedding schemes are to be avoided as they are very expensive for the
system. Generation shedding schemes should also be avoided in systems where power plants are very
sensitive to tripping, while it is not critical in systems with a high share of easily curtailed generation
such as wind or solar.
FLES can provide the equivalent service by injecting the required amount of power at the required rate
and at the same or equivalent point in the grid. FLES can also be used as a generation shedding scheme
by enabling a control scheme that leaves room for power absorption from the system. This service could
create a new market for FLES by selling it to system operators whose cost of energy not
supplied/curtailed justifies paying for a service that avoids them to shed load/sensitive generation in
case of a severe frequency event. Using FLES for these services would reduce the volume of load or
generation to curtail.
Potential barriers:
▪ V13.1 If the energy storage solution is not directly dispatched by the system operator, it might
require special control schemes for SOs to drive the operation of assets.
24
▪ V13.2 No regulatory framework and tariff for the participation of FLES to this service.
▪ V13.3 FLES are not valued in capacity markets.
4.14 Value of simplifying technical requirements on generation plants

References of flexibility needs: related to implementation of B, C, E needs

A trade-off could be optimized between:
(1) engineering and building complex generation plants designed to provide energy and ancillary
services
(2) versus engineering and building simple generation plants designed for energy-only and using
separate FLES units to provide ancillary services. Regarding the development of new plants, especially
complex plants such as nuclear plants, this option could generate a lot of savings.
In addition, it could be more economically efficient to produce energy with complex plants rather than
reserving part of its capacity for ancillary services.
As an example of this value stream see:
▪ Patel, S. (2012). Power digest : AES Gener, AES energy storage complete hybrid battery
storage project. 156.
▪ AES Energy Storage Team, May 3, 2012. AES Combines Advanced Battery-Based Energy
Storage with Traditional Power Plant. http://blog.fluenceenergy.com/2012/05/03/aes-
combines-advanced-battery-based-energy-storage-with-a-traditional-power-plant
Potential barriers:
▪ V14.1 In many countries, generation plants are required by regulation to be capable of providing
ancillary services. In case of requirements for faster response, improvements can be limited by
the technology itself (e.g. CCGT or steam turbines).
Note: If a storage unit integrated within a generation facility is considered as part of the
generation plant it should not be a barrier.
25
26
5. List of future value streams

This section presents value streams that are in an early stage of technical development. Thus they all
share technical barriers, but it is too soon to identify regulatory and market design barriers. All of
these future value streams are related to the flexibility need “Stability and power quality”.
5.1 Synthetic inertia (frequency rate of change)

References of flexibility needs: C2

Control systems of FLES can create virtual inertia by injecting power for a short duration (in relation to
frequency deviation or frequency derivative). The requirement of synthetic inertia sources of this kind
will rapidly gain importance, since the build-up of RES capacity triggers an increased need of inertia
while more and more system inertia provided by synchronous machines is lost. However, it should be
noted that current synthetic inertia schemes do not behave as synchronous machines. Because
measurements take time (at least 100ms), they have no effect on the initial Rate of Change of Frequency
(RoCoF). Only controls like grid forming (see Section 3.3) can influence it.
FLES can provide a solution to the inertia problem:
▪ FLES controls can be designed to make them behave almost like synchronous generators,
though they will not have any impact on the initial RoCoF
▪ FLES are well scalable and they can be erected wherever they are needed (usually no special
environmental requirements, no significant hazards)
▪ In contrast to synchronous compensators (the “conventional” alternative source of inertia),
FLES have very low stand-by losses
Potential barriers:
▪ Although the growing need for synthetic inertia is not debated, inertia has not yet been
established as an official grid service. Hence, inertia has no quantified value.
5.2 Damping oscillations


In large power systems, with long distances between large generation and load centers, the system
may develop inter-area oscillations of frequency. There is the potential to use distributed energy storage
systems in specific nodes of the grid combined with PMUs information to compensate the power system’s
oscillations and minimize its impact.
Figure 8 – Impact of damping control on frequency oscillations (Source: Sandia National Laboratories)
27
However, the use of FLES to provide this service is still in an early stage of technical development.
Potential barriers:
▪ The use of FLES to provide this service is still in an early stage of technical development.
In the same sense, there is no market for this kind of service yet.
5.3 Synchronisation / grid-forming


Today synchronism is “naturally” provided by the electromechanical coupling of synchronous
generators, also called synchronizing torque, leading to a shared and consistent frequency for all the
synchronous zone. With the current design of their power-electronics interface, wind and solar
generation do contribute to synchronization as they “simply follow” the frequency signal provided by
conventional generation. Therefore in a large power system, at times of operation with too few
synchronous generators, the risk of loss of synchronism (resulting in emergency partitioning of the
system) increases dramatically.
In future large power systems, grid-forming will need to be achieved consistently by different units
spread across the synchronous zone, and possibly with robustness to the absence of fast
telecommunication dedicated to synchronization between these units. This could be actively provided
by advanced grid-forming control strategies implemented on distributed power-electronics units of RES
or storage units. Thus, using storage installations could be one way of providing it.
It is the purpose of the MIGRATE European research project to assess the needs for active synchronism
and to develop grid-forming solutions.
Potential barriers:
▪ Grid-forming for large power systems is at research stage.
▪ Grid-forming has not yet been established as an official grid service.
▪ The use of FLES to provide this service is still in an early stage of technical development.
28
6. Analysis of significant and recurrent barriers

Following the specification of flexibility needs and their related potential value streams and barriers, it
has been asked to the different participants to list the barriers that are relevant to their country.
Information on active barriers have been gathered for 14 countries: Australia, Brazil, Canada, Croatia,
France, Germany, Italy, Ireland, Japan, Portugal, South Africa, Spain, Switzerland and the United States.
The following sections present a summary of significant recurring barriers, i.e. the regulatory and market
design barriers that were active across most countries. We organized the resulting barriers in four
groups.
It should be noted that this work aims at listing what are the main barriers that limit the total unlocking
of some values that can be technically provided by FLES. There is no statement on whether these
barriers should be removed or not. Indeed, in some cases unlocking certain value streams of FLES may
not be justifiable economically. For instance, the cost of adapting market rules and having more complex
market designs should be considered, or the unbundling between transmission and generation may
disadvantage FLES but it has other benefits too.
6.1 unclear status

6.1.1 Grid tariff inadequacy
References of barriers: V1.1
The structure of grid tariffs may not be cost reflective, meaning that it does not exactly represent the
cost and the value created by each user at each time. As a consequence, the double charging of FLES
in some countries (fixed charge for injection and for withdrawal) may not reflect its real cost. The tariff
could be redesigned considering the special case of storage, which acts simultaneously as a consumption
and a generation asset. However, a clear definition of storage in the regulation is a necessary first. As
an example, the UK has defined storage as a generation asset.
6.2 BUNDled Ancillary services and conventional generation

6.2.1 Provision of mandatory services from conventional power plants
References of barriers: V3.2, V11.1
In many countries, conventional power plants are required by the regulation to provide mandatory
services such as ancillary services, which limits the valorization of these services from other resources
such as FLES. For instance, frequency regulation service is a mandatory and non-remunerated service
in Spain, Portugal and Italy, which limits the business opportunity for FLES.
6.2.2 Ancillary services not opened to FLES

References of barriers: V8.1, V12.1, V12.2
As an example, black start service is restricted to generating units in most countries. More generally,
TSO/DSOs can purchase some ancillary services, such as grid congestion or black start, from resources
based on their generation type and not on technology agnostic criteria. This technological discrimination
is a limitation to the participation of FLES. Even if there is no current need or economical relevance for
FLES to provide these types of services, it could be anticipated.
29
6.3 barriers related to “fast” characteristics of fles

6.3.1 Inadequacy of existing regulations or market designs
References of barriers: V2.1, V3.1, V5.1, V6.1
In most countries, existing regulations do not value the additional flexibility potential of FLES compared
to conventional generation. Indeed, the framework for the provision of ancillary services was defined
based on a power system with a conventional generation mix. Consequently the flexibility requirements
in current regulations are below what new resources, such as FLES, can provide. These flexible
resources are under-valued and the requirement levels from regulations are not demanding enough
regarding their actual capacity.
For instance, ancillary services usually have ramping and response time requirements that are below
the technical capacities of FLES. Some regulations are not opened to assymetric frequency response,
mostly for primary regulation. In the case of Portugal, the provision of secondary regulation services
requires a fixed ratio between up and down reserve which limits the participation of FLES. Another
common example is the regulatory restriction to resources with limited duration to provide frequency
reserve. Either there is no regulatory framework for the participation of resources with limited duration
to frequency regulation or resources are asked to be available over long durations (e.g. weekly products
for primary reserve in Switzerland) which is a barrier to the participation of FLES. One example of
current market designs limitation is related to ramping. In most countries, energy blocks have a time
resolution > 15 minutes. Shorter time resolution would better approximate ramping. Germany which
already has 15 minutes energy blocks suggests a higher resolution up to 5 minutes. Explicit ramping
products could be an alternative to shorter energy blocks duration.
6.3.2 Define new ancillary services

The creation of new services (e.g. fast frequency reserve) requires regulatory, market and tariff revision.
Fast frequency reserve is not regulated as a service in most countries. Thus, faster response resources
are not valued accordingly. Some countries such as the UK, Ireland or Norway have already created
fast frequency reserve.
6.4 barriers related to “High-location freedom” characteristics of fles

6.4.1 Ownership limitation
References of barriers: V7.3, V7.4, V10.1
This barrier is common to countries with generation unbundling and where there is no mechanism to
reveal the locational value. TSO/DSOs may be forbidden by regulation to (a) own storage, especially if
it is defined as a competitive asset in the regulation instead of a grid asset, or (b) operate it in a way
that interferes with the market. The last point is particularly unclear: if FLES is only used for grid
purposes and/or operated in a way that does not impact system balancing, is the charging/discharging
phase to anticipate or react to a grid event considered as market interference?
6.4.2 Inexistence of mechanisms for reliable operation of FLES for congestion

management
The inexistence of reliable mechanisms to operate storage sites for congestion management should be
tackled, as it appeared to be an issue in most countries. Solutions to this specific issue have been
suggested such as (a) a more grid-topology based pricing (e.g. nodal pricing) and (b) a structured
redispatch market. Tackling this issue would require to address the question of the efficiency of these
mechanisms for reliable short-term operation. This is out of the scope of this Working Group, hence no
recommendation is provided in terms of solution.
30
6.4.3 Investment coordination problems between network and alternative

solutions
References of barriers: V7.5
Even in countries where mechanisms exist for reliable operation of FLES for grid services, there can be
barriers at the investment stage. For instance, short-term locational signals may not be adapted to long-
term investment. This is due to the lack of locational incentive, or too high interdependency between
the TSO/DSO’s grid development plan and the storage operator’s business model. For instance, a local
grid congestion that leads to a strong locational signal would incentivize a storage operator to invest in
a battery at this location. However, what should the storage operator do if a line is built later to remove
the congestion, thus removing the locational value from the battery?
31
32
7. Conclusion
The focus of this collaborative work was understanding regulation and market barriers preventing to
fully capture the value from “new” energy storage technologies which have the particularity to be fast
(high ramping rate) and to have high-location-freedom (installation possible almost everywhere on the
grid).
In a first step, we specified what are the flexibility needs of power systems. Then, a list of related
potential value streams and barriers for FLES was drawn. Two groups of value streams were identified.
The first ones, which are technically mature and may face regulatory and market design barriers, were
considered in the country-by-country analysis. The others were in an early stage of technical
development, so it was too soon to identify regulatory and market design barriers though future value
streams may be expected. Finally, a country-by-country analysis was performed among the Working
Group to identify which regulatory and market design barriers of the technically mature value streams
were active in the different countries. The most significant and recurrent barriers were extracted from
the answers obtained for 14 countries (Australia, Brazil, Canada, Croatia, France, Germany, Italy,
Ireland, Japan, Portugal, South Africa, Spain, Switzerland and the United States). Overall, the Working
Group outlined that most regulation and market design could be improved by following these four main
recommendations:
1. There should be a clear definition of the status of storage, either generation,
consumption, both or a specific status. The absence of status or an unclear status is inhibiting.
2. Ancillary services should be defined in a market-based way without technological

discrimination. Not only, should existing ancillary services be opened to storage (no
exclusivity for conventional generation). But also, the mandatory provision of some services
from conventional generation should be avoided.
3. In a context of evolving system needs towards faster system services, rethink the
specification of existing ancillary services and consider news ones in order to take
advantage of fast new storage technologies. For example, a power system with low inertia
may consider faster frequency containment response than the service usually requested from
thermal generation.
4. Finally, in order to take advantage of the congestion management capability of high-

location freedom new storage technologies, the coordination of grid and flexibility
resources including storage should be enabled. In case of separate entities operating
network assets and storage assets, the interface between these entities should address both
long-term risk (the congestion value collapses if the grid operator finally plans a grid
reinforcement), and operational risk (the firmness of the availability and performance of the
storage-based congestion service are critical for the grid reliability).
Further work may be focused on studying the case of specific countries which have improved their
market design and regulation in order to better capture the value of FLES. For instance, the case study
of Chile where most regulatory and market design barriers for FLES have been removed would be of
interest to understand the initiatives which have been implemented and their real-life performance.
Another country worth studying may be Ireland which already faces inertia challenges.
It should be noted that during the study, regulations evolved in some countries, mostly in favor of
storage integration. As the context is moving fast, and the results we presented in this report may
become obsolete in a matter of months, yearly updates could be performed in the future.
Finally, behind-the-meter storage, especially distributed storage, was not included in the scope of this
work and it could be a possible extension to study. Barriers such as the granularity of offers, the absence
of participation to some mechanisms such as ancillary services or the absence of mechanisms to enable
congestion management with distributed storage may be investigated.
33
34
APPENDIX A. Country-by-country analysis of active

barriers
In the following tables are presented the results from the country-by-country analysis for 14 countries:
Australia, Brazil, Canada, Croatia, France, Germany, Italy, Ireland, Japan, Portugal, South Africa, Spain,
Switzerland and the United States. The representative of each country has listed the barriers referred
to in Section 4 that are active in the country, with additional explanation when necessary.
App Table 1 Summary table of potential barriers

Flexibility
needs
AU
HR
CH
CA
BR
DE
US
ZA
FR
PT
ES
JP
IR
Potential barriers
IT
V1.1 Grid tariff barrier X X X X X X X X X X X
A – Forecasted
balancing
V1.2 Inefficiencies related to FLES in spot

X X X X X X X X X X X X
market
V2.1 Need for ramping not represented
X X X X X X X X X X X X X
and valued by markets
V3.1 Frequency regulation service not
X X X X X X X X X
opened to FLES
V3.2 Frequency regulation service
X X X X X X
mandatory for conventional generation
B – Real-time balancing
V4.1 Specification of slow frequency

X X X X X X X X X
containment reserve only
V4.2 No market for fast frequency
X X X X X
regulation
V4.3 Reserve price not related to response
X X X X X X X
speed
V5.1 Asymmetric frequency containment
X X X X X X X X X
reserve not specified
V6.1 Frequency regulation required over
X X X X X X X
long durations
V7.1 Redispatching not opened to FLES X X X X
V7.2 Lack of mechanisms to value and
D – Management of grid flows
allow FLES to provide reliable congestion X X X X X X

management
V7.3 TSO/DSOs cannot own storage for
X X X X X X X X X X
multi-purpose
V7.4 TSO/DSOs cannot own storage for
X X X X X X X X
grid-only service
V7.5 High interdependency between grid
X X X X X
planning and storage business model
V8.1 Lack of well-defined and organized
services for TSO/DSOs to purchase X X X X X X X X X X X
congestion service from FLES operators
35
V9.1 Generation and transmission

unbundling or absence of locational X X X X X X X X X X X
incentive
V10.1 Ownership limitation for
X X X X X X X X X X
investment deferral
V10.2 Market barriers for investment
X X X X X X X X X
deferral
V11.1 Black start service not opened to
X X X X X X X X X
FLES
V11.2 Black start capability mandatory for
X X X X X
conventional generation
V12.1 Value of FLES for service restoration
E – Emergency modes
X X X X X X X X X
plans not recognized
V12.2 Provision of black start capability
from FLES located in the grid not X X X X X X
recognized
V13.1 Ownership limitation for
participation of FLES in load/generation X X X X X
shedding schemes
V13.2 Participation to load/generation
X X X X X
shedding schemes not opened to FLES
V13.3 FLES not valued in capacity market X X X X X
V14.1 Ancillary services mandatory for
B, C, E
conventional generation X X X X X X X
App Table 2 Results from the country-by-country analysis of active barriers
Country Active Explanation

barrier
AU V1.1 The current retail market tariff is primarily energy based (kWh), despite grid tariff
structures having trended towards a larger proportion of cost recovery through peak
demand (kVA or MVA) based settings. In part, this is due to slow uptake of real time
meters.
AU V1.2 Storage facilities which are scheduled may be exposed to dual loss factors. The loss factor
may be different for charging and discharging, increasing the effective efficiency losses of
the charge/discharge cycle.
AU V2.1 The range and speed of ramping is not valued in a planning sense. However in the real
time market ramping is valued in a number of frequency control markets (regulation and
contingency reserve).
AU V3.1 The technical requirements to register for provision of frequency control services allows
FLES to participate if the facility meets comms and telemetry recording standards. There
AU V3.2
is no access for small/distributed FLES to market value of less than 1MW in size. Trials are
underway to enable aggregation of small facilities to at least 1 MW aggregates.
AU V4.2 Although some preliminary work has been explored in relation to ‘fast frequency reserve’
and synthetic inertia, there is no market for services able to ramp faster than 6-seconds.
AU V4.3
36
AU V5.1 The design of the market dispatch engine does not allow dispatch of generation or load
to pass through the zero crossing. The charge component (a dispatchable load) and
discharge component (a scheduled generator) of the same facility may be represented by
two registered units to overcome this limitation.
Offers for raise and lower services are not required to be symmetric.
AU V6.1 The service is required to be sustained for a period of 5 minutes at most, aligned with the
next system dispatch interval.
AU V7.3 The regulatory framework for ownership of FLES by the network business is not clear and
at present is variable across jurisdictions.
AU V7.4
AU V8.1 -
AU V9.1 As market pricing is ‘regional’ rather than nodal in the Australian markets, there are not
very strong locational signals in place.
AU V10.1 Combination problem per barrier 7.3 and 9.1
AU V10.2
AU V11.1 -
AU V11.2 -
AU V12.1 -
AU V12.2 -
AU V13.1 -
AU V13.2 -
AU V13.3 -
AU V14.1 Similar to V4.2
BR V1.1 Grid tariff is not adapted to FLES. There is a different fixed rate for power injection and
withdrawal, meaning that FLES would have to pay twice.
BR V2.1 Absence of ramping product (only energy blocks).
BR V3.1 TSOs require the service to come from online synchronous resources.
BR V3.2 Frequency regulation is provided by power plants, according to the Brazilian system
operator (ONS).
BR V4.1 Only slow frequency containment reserve is specified and purchased by the TSOs.
BR V4.2 Fast Frequency Response such as synthetic inertia was introduced and applied as
mandatory requirement for all wind turbines. The requirement is that all wind plants
provide an emulated inertial response of at least 10% of their installed capacity during
under frequency events.
BR V4.3 -
BR V5.1 -
BR V7.1 -
BR V7.2 -
BR V7.5 There is too high interdependency between the TSO/DSO development plan and the
storage operator business model.
BR V8.1 -
37
BR V9.1 There is no incentive for the location of storage sites.

BR V10.1 Network capacity expansion is made by auctions. It would be necessary a study to
identify buses of the network where FLES could be placed, aiming at network stress relief
in case of marginal overloads.
BR V10.2 Same answer for V10.1
BR V11.1 No regulatory framework and tariff for the participation of FLES to this service.
BR V11.2 Based on studies, ONS sets which generation power plants could operate to this service
(black start).
BR V12.1 Energy storage is not predicted on regulation as a service restoration plan.
BR V12.2 -
BR V13.2 -
BR V14.1 Generation plants are required by regulation to be capable of providing ancillary services.
ONS is responsible for the contracts and management of ancillary services. Based in the
currently regulation, ancillary services are defined as frequency controls and power
reserve, reactive power support, black-start and Protection Special System (SEP).
CA V11.1 Battery is not intended for Black Start yet. System operator procure black start through
competitive bidding process
CA V11.2 The requirement of FLES Black Start protection is not that yet
CA V12.1 Service restoration plan is not added in the battery energy storage.
CH V1.2 Shortening of length of trading blocs & shorter gate closure time would increase market
efficiency and favor FLES
CH V2.1 With reasonably short gate closure times and block lengths, similar quality results can be
achieved like with ramping products, but probably at a lower complexity. Both solutions
would favor FLES
CH V4.1 Primary reserve is currently the fastest service. However, products with ever faster
response time would have to be well coordinated with all partners in the synchronous
zone (Europe), as such products will have a strong impact on dynamic stability
CH V4.3 As there is enough capacity on the market, price formation for existing reserve products
is competitive, i.e. there is no need interfere. However, there are no products specified to
cover shorter timeframes than primary frequency regulation. See also V4.1
CH V5.1 Limitation applies to primary regulation. Tertiary regulation is already asymmetric in
Switzerland, and asymmetric secondary regulation products has become a product in
June 2018.
CH V6.1 Weekly products only for primary reserve
CH V7.3 TSO is clearly forbidden to interfere with market. As long as TSO-owned FLES would
exclusively be used for congestion relief (redispatch), it would probably be OK. However,
renting of residual capacity may be an issue (unclear)
CH V7.4 Owning FLES for grid purposes only is probably OK if TSO can provide proof that it is the
most economical alternative to solve a problem. However, procurement of electricity for
charging of the FLES (readiness for operation) may be considered a market interference
(unclear).
38
CH V8.1 By definition, the issue currently does not exist due to (n-1) grid security criterion. May
change in future because classical (n-1) criteria may no longer be sufficient to ensure grid
stability (-> synthetic inertia)
CH V9.1 This issue is of fundamental nature. It would require some market design changes
(applies for Switzerland, but even more so for central Europe). Options: (a) a more grid-
topology based pricing (ideally a nodal pricing), and/or (b) a structured redispatch market
CH V10.1 See V7.2
CH V10.2 See V7.2
CH V13.1 See V7.2
CH V13.2 Generation shedding due to under/overfrequency is not a local issue, but a synchronous-
zone wide challenge. This is why over/underfrequency disconnection is part of the
common grid code in Europe. A non-coordinated effort of an individual country to damp
dynamic frequency excursions would not be effective. At worst, it may even induce grid-
wide stability issues. In my view, the question is only relevant to voltage control.
CH V13.3 So far, there are no capacity mechanisms in Switzerland
DE V1.1 Fixed charges for withdrawal (treated as end user), with some exceptions
DE V1.2 -
DE V2.1 15 minutes blocks in Germany, higher resolution (e.g. 5 minutes) would be better
DE V4.1 No additional value in case of faster reaction / shorter delay, only definition of maximum
delay
DE V5.1 Only partly (primary control)
DE V6.1 Only partly (primary control)
DE V8.1 Bilateral contracts, no market
DE V9.1 No local or zonal pricing, but compensated redispatch (regulated)
DE V13.3 No capacity market
DE V14.1 New PV installations have to provide some ancillary services
ES V1.2 The current maximum and minimum price caps existing at energy markets constitute a
barrier for FLES business in Spain
ES V2.1 Currently, no explicit value for ramping at energy markets
ES V3.1 Currently, frequency regulation service is a non-paid mandatory service in the Spanish
system so does not imply a business opportunity for FLES
ES V4.1 Fast frequency response is not regulated as a service in the Spanish system
ES V7.3 Under current regulatory framework not allowed for TSO/DSO to own storage assets
ES V7.4 Under current regulatory framework not allowed for TSO/DSO to own storage assets
FR V1.1 Fixed charges for injection and withdrawal respectively

FR V1.2 No swapping possibilities on the spot market and efficiency losses not compensated for
FR V2.1 30 minutes energy blocks in France, which is better than 1 hour and allows FLES to
participate, but 15 minutes energy blocks would be a better time resolution
39
FR V3.1 Resources with limited duration cannot participate to frequency restoration reserve
FR V4.1 Fast frequency reserve not defined
FR V4.2 -
FR V4.3 -
FR V6.1 -
FR V7.2 -
FR V7.3 -
FR V7.4 -
FR V7.5 -
FR V8.1 Only allowed for R&D demo
FR V9.1 -
FR V10.1 -
FR V10.2 -
FR V11.1 Today black start is required only from some generation units, no framework to have
batteries in it
FR V12.1 Restoration plans have not been updated to take into account battery storage
FR V12.2 -
HR V1.1 The main issue with storage is the lack of definition within national legislation.
Consumption, generation, transmission and distribution are sufficiently defined and
elaborated whereas storage is still without proper definition.
HR V1.2
HR V2.1 No definition for explicit value for ramping at energy market
HR V3.1 Frequency regulation service is not paid and is a mandatory service, so it does not
present as a business opportunity for FLES
HR V5.1 Only partly (primary control)
HR V7.2 -
HR V7.3 Still there is not clear regulatory framework in which TSO/DSO can be owner of storage or
to which storage may be forbidden. The main reason is that storage is still without proper
definition.
Note: There are some indications which say that if the system operators can justify the
reason why storage is the "best" option (as compared to a new line for example) and
there are no other investors interested in building a storage in that location - the system
operator will be allowed to own storage. However, this is a gray area and not defined in
the regulatory framework or by any guidelines/methodology by system operators.
HR V7.4 Under current regulatory framework it is not allowed for TSO/DSO to own storage assets
HR V8.1 There is no congestion service that can be bought at the energy market
HR V9.1 Nodal prices are not applied in Croatia
HR V10.1 No clear regulatory framework related to ownership of the FLES
HR V10.2 Clear rules are not set for a participation of FLES at the energy market
HR V11.1 Same as V7.3
40
HR V12.1 Restoration plans have not been updated to consider FLES

HR V12.2 Same as V13.1
HR V13.1 -
HR V13.2 -
HR V13.3 -
IT V1.1 Distribution tariffs are mainly capacity based while transmission tariffs are more energy
based. The net metering (the payment of network charges and other policy costs
according to the difference between consumptions and injections on a long time horizon)
is allowed for self-consumers.
IT V1.2 -
IT V2.1 1 hour energy block. System operator knows the technical parameters like ramping
period and Full Activation Time (FAT) so it can choose more valuable resources.
IT V3.1 All frequency regulation services do not have limited duration, so FLES participation is not
allowed. The regulation is evolving towards allowing the participation of FLES in the
tertiary reserve services through pilot projects for Virtual Unit of consumption (UVAC),
production (UVAP) and mixed (consumption and production - UVAM). This regulation
foresees a limited duration from 2 to 8 hours.
IT V3.2 Frequency Containment Reserve (FCR) is mandatory but not remunerated.
IT V4.1 Fast frequency containment reserve does not exist.
IT V5.1 -
IT V6.1 -
IT V7.1 -
IT V7.2 There is no market for locational needs. Even though the locational value is, in part,
provided by the partition of the market into six bidding zones.
IT V7.3 DSO and TSO can own a storage only in case of market failure.
IT V7.4 See V7.3
IT V7.5 -
IT V8.1 -
IT V9.1 In Italy the unbundling between generation and transmission applies.
IT V10.1 -
IT V10.2 -
IT V11.1 Black Start service is mandatory for selected conventional power plants and it is not
remunerated.
IT V11.2 -
IT V12.1 -
IT V12.2 -
IT V13.1 See V7.3 and V9.1
IT V13.2 -
41
IT V13.3 FLES are allowed to participated in the capacity remuneration mechanism (that was
approved by the European Commission but it is waiting the final approval at national
level)
IT V14.1 -
IE V1.1 Tariffs currently based on traditional hydro pumped storage model assuming Maximum
Import Capacity and Maximum Export Capacity. Revised provisions for FLES are currently
being developed, with Connection Charges based on Maximum Export Capacity.
IE V1.2 The shortest market scheduling interval is currently 5 minutes, which may be too long for
some of the services provided by FLES. Additionally, the FLES facilities which are
scheduled may be exposed to dual loss factors which are not fully captured as losses may
be different for charging and discharging.
IE V2.1 Ramping Margins at 1, 3 and 8 hours is not currently optimized in Market schedulers but
the functionality exists. This system service product is expected from Autumn 2019.
Other frequency control ramping such as Negative Ramping Reserve and contingency
reserves are considered presently.
IE V5.1 FLES may contribute dynamically to both Upward and Downward frequency response
based on current operational state. However, the latter product does not possess a
standalone tariff but this is under consideration.
IE V7.1 Preventive Transmission Congestion Relief is not currently applicable. Some Power Parks
have installed FLES within their facility to alleviate system curtailment and power spilling,
IE V7.2
however, this is behind the meter and not controlled by the TSO/DSO at present.
IE V7.3 The TSO is not permitted to own any generation assets apart from Interconnectors which
are considered Transmission Assets. The DSO has also been unbundled, but the parent
IE V7.4
group has generation assets including hydro pumped-storage.
IE V7.5 Grid Planning is considering the impact of FLES and storage on the future network needs
through Scenario Planning. The Enduring Connection Policy cycle has been revised to
include capacity reserved for FLES and System Service Providers.
IE V9.1 There are negligible location based incentives for any new generation or storage capacity.
However, specific arrangements are tendered from time to time to maintain locational
security of supply.
IE V10.1 Investment in new Transmission Infrastructure is challenging so alternatives such as FLES
may be considered to alleviate some of these constraints. However, they are not
considered a complete solution as they cannot increase interconnectivity for N-1
compliant security of supply etc. As the TSO will not own the FLES, they may seek
connection in sub-optimal transmission network locations. This may augment transient
overloads during fast response to system faults.
IE V10.2 Market barriers are foreseen based on the current design since some of the response
timeframes are too fast for the 5 minute balancing market scheduling sequences.
Additionally, FLES may cannibalize available capacity for alternative generation if
considered in “generation” mode.
IE V12.1 There are no existing requirements for FLES to participate in black-start. However, such
services are routinely procured and FLES, like other generation (including traditional
hydro pumped-storage) may offer same, providing they can demonstrate their capability
through operational testing. This may place a requirement on the FLES to ring-fence a
portion of their capacity exclusively for this service. All generation capable of supplying
these services are then considered in developing regional System Restoration Plans,
subject to availability on the date required.
42
JP V1.1 There is no peak demand reduction market for FLES. Aggregator with FLES can reduce
their peak demand.
Tick for energy in the spot market is 500kWh in half hour and this tick is too big for FLES.
JP V1.2 There is block bidding product of selling on the spot (day-ahead) market. FLES require
the market to bid a set of selling and buying block products to keep its SOC and time
coupling constraints.
Charge and discharge for FLES make energy losses and this is a disadvantage for spot
market.
JP V2.1 There is no ramping market for FLES. Each TSO procures annual balancing and regulation
powers through competitive bidding. Aggregator with FLES can apply for the competitive
bidding. Minimum capacity to apply for this competitive bidding is too big for FLES, for
example 12.5MW in Tokyo Electric Power Company area.
JP V3.1 There is no frequency regulation market for FLES. Each TSO procures annual balancing
and regulation powers through competitive bidding.
JP V3.2 Conventional power plants are required to provide frequency regulation to apply for the
competitive bidding. TSOs require the service to come from online, synchronous
resources, or resources with limited duration cannot participate to this service.
JP V4.1 Fast frequency reserve is not defined. Segmentation of reserves is being discussed
referring Europe and North America definition.
JP V5.1 -
JP V6.1 There is no frequency regulation capacity is not defined.
JP V7.3 There is no preventive transmission power market for FLES. TSO procures annual
balancing and regulation powers through competitive bidding and can use the procured
power for power system stability.
JP V8.1 There is no curative transmission congestion relief market for FLES. TSO procures annual
balancing and regulation powers through competitive bidding and can use the procured
power for power system stability.
JP V9.1 There is no local grid congestion relief market for FLES. TSO procures annual balancing
and regulation powers through competitive bidding and can use the procured power for
power system stability.
JP V10.1 -
JP V14.1 -
PT V1.1 The tariff was not designed considering the use of FLES. Further adaptation might be
necessary to avoid double charges on FLES (as consumer and generator by having both
working modes).
PT V1.2 Portuguese Electricity market doesn't differentiates the offers by time of delivery (at least
not at the scale proposed by FLES).
PT V2.1 In Portugal the energy blocks used in the market correspond to 1 hour resolution. The
designation of a shorter resolution (e.g. 15 min window) could benefit the provision of
fast ramping support services by FLES in case these services are defined for the system
services market.
PT V3.1 The provision of frequency regulation services is mandatory and obey to specific
minimum requirements for its provision established by the TSO.
PT V3.2 The provision of frequency regulation is a mandatory and non-remunerated service in
Portugal.
43
PT V4.1 This kind of Fast-Frequency Containment Regulation service is not defined in the
Portuguese regulation. Besides this, primary frequency regulation is a mandatory and
free-of-charge system service.
PT V4.2 -
PT V4.3 -
PT V5.1 e.g. in Portugal, the provision of secondary regulation services requires a minimum
capacity (10MW) to be eligible for the market participation and there is a fixed ratio
between up and down reserve for the offers (2/3 in the up direction and 1/3 in the down
direction), among other requirements (e.g. maximum response times).
PT V6.1 -
PT V7.1 -
PT V7.2 -
PT V7.3 The ownership of energy storage by TSOs is not sufficiently clear from the regulatory
point of view. If the NRA considers energy storage devices as generation units, TSOs
might not be able to own and operate energy storage devices due to regulatory
constraints (generation unbundling).
PT V7.4 -
PT V7.5 -
PT V8.1 It is not defined which services TSOs/DSOs can buy from energy storage operators.
PT V9.1 Nodal prices are not applied in Portugal.
PT V10.1 See V7.1
PT V10.2 -
PT V11.1 -
PT V11.2 -
PT V12.1 There is a need for the demonstration of the effective benefits of new services to be
provided by FLES and on the capability and characteristics of the service (e.g. minimum
duration). Black start capability of FLES might be restricted due to their limited capacity.
PT V12.2 -
PT V13.1 There is no specific regulation defined for FLES. Currently, FLES should follow the same
regulation of generators and consumers.
PT V13.2 -
PT V13.3 -
PT V14.1 -
US V1.1 In some regions, storage resources that have less than four hours of storage do not credit
for their peak reduction capability, even when they may do so. Recent regulations may
change this to eliminate this barrier in the next few hours.
US V1.2 In some regions, storage must determine when it participates in charge mode or in
discharge mode, and in these regions there may be inefficiency in how to use the storage
resource optimally across time.
44
US V2.1 Most markets in the USA incentivize for ramp in different ways, either through real-time
pricing or through additional ramp products. It is not clear whether limited energy
storage are eligible to receive value through these mechanisms in current designs since
limited energy may not participate in real-time energy markets, and may not be eligible
to participate in ramp product provision.
US V4.3 Fast frequency containment reserve (also called primary frequency response) is currently
not a market product in USA markets. Therefore, this is not necessarily a barrier to
energy storage resources. However, the reliability standards themselves do not value fast
response for frequency containment reserve, which may limit any value for energy
storage attributes outside the market.
US V8.1 -
US V11.1 -
ZA V1.1 Tariffs not designed to incorporate storage (thus far)

ZA V1.2 No spot market
ZA V2.1 No value for ramping, time of energy dispatch is hourly
ZA V3.1 FLES not deployed yet so no precedent set (or regulations) but Grid Code allows for it
(likely only via TSO owned storage at this stage)
ZA V3.2 Only selected plants have to provide frequency regulation but this will be a barrier to
FLES if system does not grow as expected and increased variable RES necessitates
increased regulating reserve requirements
ZA V4.1 Frequency containment reserve is specified as full activation in 10 seconds and sustained
for 10 minutes. Thus, FLES would not be fully valued considering that it could likely
respond much quicker
ZA V4.2 No published literature (yet) on the South African power system need for fast frequency
response and regulation - only on existing needs for already defined ancillary services
(instantaneous, regulating and ten-minute reserves)
ZA V4.3 Fast reserve response beyond the abovementioned reserves is not explicitly valued (and
thus not paid for).
ZA V7.3 TSO owns and operates storage (pumped storage) and provides system service (not in
multi-purpose setup renting residual capacity to market players)
ZA V8.1 Lack of well-defined and organized services for TSO to purchase congestion service to
storage operators with a guaranteed fast activation process
ZA V9.1 Minimal incentive for new location-based generation/storage
ZA V10.1 Regulatory barriers foreseen for the ownership of new FLES - vertically integrated utility
owning Gx/Tx//Dx
ZA V10.2 Market barriers foreseen for the operation of new FLES if not operated by existing
vertically integrated utility owning Gx/Tx//Dx
ZA V11.1 No existing regulations to allow FLES to participate in black-start.
ZA V12.1 -
ZA V14.1 Minimum requirement to provide certain ancillary services above a particular size for
generators (50 MVA). No allowance for simpler plants supplemented by faster response
FLES. Could be considerably faster than existing coal-dominated fleet.
45
CIGRE
21, rue d'Artois
75008 Paris - FRANCE
© CIGRE
978-2-85873-454-2

752 REgulation and Market Dedign Preven... Energy Storage

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C5

Regulation and market design

D. GAME, Convenor FR C. PACHE, Secretary FR T. SAWA JP

2. Ancillary services1 should be defined in a market-based way without technological

4. Finally, in order to take advantage of the congestion management capability of high-

Further work may be interesting for the power-system community, especially:

2. How to read this report............................................................................................ 11

3. Flexibility needs of power systems ........................................................................ 13

4. List of technically mature value streams and potential barriers .......................... 17

5. List of future value streams .................................................................................... 27

6. Analysis of significant and recurrent barriers ....................................................... 29

6.4 barriers related to “high-location freedom” characteristics of fles .................................................... 30

APPENDIX A. Country-by-country analysis of active barriers……………………33

Figures and Illustrations

Figure 1 – Scope of the WG C5.25

2. How to read this report

3. Flexibility needs of power systems

Figure 2 – List of flexibility needs

3.1 Flexibility for the forecasted balancing of load-generation (energy

3.2 flexibility for the real-time balancing of load-generation (frequency

3.3 flexibility for stability and power quality

3.4 flexibility for the management of transmission and distribution flows

3.5 flexibility for emergency modes

4. List of technically mature value streams and

Figure 3 – Technically mature value streams for each flexibility need

4.1 Peak residual demand reduction

Description of value stream:

4.2 Ramp support

Description of value stream:

Figure 4 – The California Duck Curve (net load 2012-2020)7

4.3 Frequency regulation service

Description of value stream:

4.4 Fast frequency containment response

Description of value stream:

4.5 Asymmetric frequency response in synergy with other services

Description of value stream:

Figure 7 – Asymmetric frequency response from batteries

4.6 Value of frequency regulation capacity with limited duration

Description of value stream:

4.7 Preventive transmission congestion relief

Description of value stream:

4.8 Curative transmission congestion relief

Description of value stream:

4.9 Grid congestion based location of balancing-storage

Description of value stream:

4.10 Value of investment deferral (t&D)

Description of value stream:

4.11 Black start capabilities

Description of value stream:

4.12 Service restoration plan – grid resilience

Description of value stream:

4.13 Load/generation shedding schemes

Description of value stream:

4.14 Value of simplifying technical requirements on generation plants

Description of value stream:

5. List of future value streams

5.1 Synthetic inertia (frequency rate of change)

Description of value stream:

5.2 Damping oscillations

Description of value stream:

5.3 Synchronisation / grid-forming

Description of value stream:

6. Analysis of significant and recurrent barriers