Maintaining grid stability in the face of variable supply and demand has led to new challenges and new opportunities for the power industry. It's led to rapid growth in ancillary services and new revenue streams for gas-fired power plants.

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For transmission and distribution system operators, delivering power as required and within specific limits of voltage and frequency is becoming increasingly difficult. As more renewables require balancing, the energy industry is placing new impetus on solutions for flexible, dynamic operational performance.

As a result, both regulatory authorities and power plant asset owners and operators are putting more emphasis on ancillary services.

Capturing new revenue

Transmission system operators (TSOs), distribution system operators (DSOs), and supply companies are typically mandated to meet minimum-service standards for grid stability and electricity supply. These requirements are met through ancillary services. They fall into two primary areas—capacity and stability.

For power plant asset owners and operators, capacity and stability services represent a potential wealth of opportunities for additional revenue.

Capitalizing on capacity

Where power systems are dominated by variable renewables like wind and solar, meeting fluctuating demand requires the availability of additional, responsive capacity. Should renewable output suddenly fall or demand rapidly spike, standby generation—typically thermal—is needed to step into the supply–demand gap.

Capacity services cover different time frames. For example, bidding to supply spinning reserve capacity might require the service provider to ramp up from almost nothing to full power in as little as 10 seconds. Running a plant just in case a revenue opportunity arises is an unacceptable risk for most operators. Prices therefore reflect that reality.

Responding to services with longer time frames of 30 minutes to hours or longer represents another opportunity for asset owners to consider, depending on grid-specific pricing structures. Aeroderivative gas power plant characteristics are ideally matched for capacity services, because operators can repeatedly spin up the equipment from a hot start to full power over a 30-minute time frame.

Grid operators are also increasingly exploring demand-side management (DSM). Here, major energy consumers such as large refrigeration warehouses gain returns by curtailing their demand during peak hours. This has led to the growth of aggregators, for example, which gather multiple consumers to bid for DSM service contracts.

Shoring up grid stability

Grid stability is another ongoing problem: When supply or demand changes rapidly, grid voltage can fluctuate. Operators may switch large loads in or out, or a passing cloud might cover a large solar project, for example. Grid operators offer additional returns to generators or other facilities that can rapidly deliver reactive or capacitive power to stabilize voltage and mitigate this effect.

Changes in supply or demand or a failure somewhere on the network can also lead to frequency excursions. Grid operators are increasingly turning to frequency-response services, as the overall inertia of the grid has diminished and frequency stability has decreased. Previously, in regions such as Europe and the US, the energy portfolio was dominated by large thermal power plants, with massive spinning generators that could absorb such fluctuations. Today, particularly in Europe, much of that capacity is gone—replaced by variable renewables and their solid state inverters, according to Eurostat. Grid operators are instead turning to the private sector, where existing thermal capacity like gas power plants still has a big role to play. 

Click here to learn more about how this trend is impacting Australia.  

Another service that grid operators need is black-start capability. When grid elements or a wide area have suffered a failure or been shut down for maintenance, grid operators typically turn to specific generation facilities capable of re-energizing the network. Often hydro plants have provided these black-start services, though gas turbines are also capable of managing large-step loads as sections of grid are energized, for instance.

Pushing for more flexibility

Regardless of the specific reason they're needed, ancillary services are set for demand growth as the proportion of renewables steadily increases almost everywhere. In the UK, for example, The Telegraph reports that National Grid's costs for managing electricity supplies have skyrocketed in recent years due to renewable-balancing demands. Governments, regulators, system operators, and generators are building new models to meet this growing need.

Grid operators everywhere require flexible generation that can respond to fluctuating grid requirements. Gas turbines, reciprocating engines, and pumped-hydro storage are well suited for this task. But, with response times sometimes measured in milliseconds, modern power electronics and associated systems have a growing role to play. Sometimes, these digital solutions can enable less flexible, existing generators to deliver the needs of the new order.

Even renewable energy producers have an opportunity to capitalize on ancillary services. The advent of storage is allowing Danish company Orsted to build a 2-MWh storage facility connection with its 90-MW Burbo Bank offshore wind farm. The additional storage capabilities will allow Orsted to offer frequency-response services.


For the owners and operators of gas-powered generation facilities, understanding the full capability of the asset is the first step to realizing its full value in the context of these new demands and services. Then, capitalizing on ancillary services may take several forms. Additional site capacity may prompt the development of storage resources, for example. Configuring a gas turbine for high efficiency and low maintenance during particular load cycles may yield favorable returns. Bottom line: New and in-demand functions and emerging revenue streams are available for power generation asset owners who can offer the flexibility and responsiveness that the power systems of today—and tomorrow—need.

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