A New Ancillary Service for Battery Storage

In a landmark move for the European energy storage market, German transmission system operators (TSOs) have officially begun procuring synthetic inertia as a new ancillary service. This initiative, launched in early 2026, is designed to mitigate the systemic impacts of retiring thermal power plants. Battery energy storage systems (BESS) equipped with grid-forming inverters can now participate by keeping the grid frequency strictly controlled within 50Hz ±0.2Hz.

Financial Impact and Revenue Stacking

The introduction of this market provides a crucial long-term revenue anchor for BESS developers. Contracts for synthetic inertia can span from two to ten years, offering predictable income without exposure to market price risks. Furthermore, this revenue stream can be stacked with other services such as energy arbitrage or frequency response, significantly enhancing project economics. Aurora Energy Research estimates that synthetic inertia services can boost the internal rate of return (IRR) for large-scale battery projects by 1 to 2 percentage points, with no market price risk. Enpal conservatively estimates an IRR uplift of about 0.9 percentage points, based on a fixed market rate of approximately €10,000 per MW.

Aurora Energy Research estimates that synthetic inertia services can boost the internal rate of return (IRR) for large-scale battery projects by 1 to 2 percentage points, with no market price risk.

Regulatory Push for Grid-Forming Inverters

To support this new market, Germany has implemented stringent technical mandates. Since June 2026, grid-forming capabilities have become mandatory for connections to the 220 kV and 380 kV extra-high voltage networks. Regulators are currently considering extending this requirement to the 110 kV network level. However, industry experts note that the formal qualification and certification of grid-forming inverters remain a technical bottleneck for battery assets seeking to provide these synthetic inertia services in practice.

Source: 100re.org.ua

This article was assisted by AI analysis. Please refer to the original source for official information.