aFRR (Automatic Frequency Restoration Reserve)

aFRR (Automatic Frequency Restoration Reserve in Capacity and Energy)

Energy Trading · May 12, 2024 · 10-minute read

The Roles of Ancillary Services

Ancillary services are used to physically balance the power grid when it deviates from its normal operating range. Automatic reserves are the first to be mobilized to stabilize the grid. If an event occurs on the network that causes a frequency deviation, the Frequency Containment Reserve (FCR) is activated first to contain the frequency deviation within 30 seconds. The aFRR takes over after a maximum of 400 seconds (to be changed to 300 seconds on December 18, 2024) to restore the frequency to the nominal level (50 Hz). Like FCR, it is an automatic reserve. aFRR providers require a direct connection to the grid control system of the connected transmission system operator (TSO) in order to exchange data in real time, enabling TSO signals to control their assets. This gives the TSO time to activate tertiary reserve measures—comprising manual frequency restoration reserves (mFRR) and replacement reserves (RR)—if needed over the long term.

aFRR Market Structure

The French aFRR market structure has undergone several significant changes. After an initial unsuccessful attempt at a deregulated capacity auction in 2021, RTE returned to a fully regulated market. The French TSO defined the secondary reserve pool. Each producer operating a generation unit of more than 120 MW was required to offer a portion of its capacity on the aFRR, with the offer being symmetrical. The offered capacity was compensated at a reference price set annually by RTE, the French TSO. For 2024, this price was set at 11.049 euros/MW (per half-hour). When activated, producers were then compensated for the energy provided at the spot price. In recent months, the market has been evolving toward a free market with the aim of integrating the French system into the European balancing network.

November 21, 2023: RTE reopened the aFRR energy market, allowing all participants to bid and receive compensation for their activation based on the marginal price of activated reserves rather than the spot price.
June 19, 2024 (delivery day): The aFRR market opened for a capacity auction, meaning that certified participants can bid their capacity the day before.

RTE defines its needs and conducts a daily auction for capacity at 9:00 a.m., one day before delivery. Providers can bid for both upward and downward capacities at different prices and volumes, and in non-symmetrical ways. The minimum power for bids is 1 MW, up to a maximum of 20 MW, and these bids can be declared as divisible or indivisible.

On the balancing day, RTE conducts 97 auctions for energy products with a 15-minute validity period. For example, the first validity period runs from 00:00:01 to 00:00:15. These auctions close 25 minutes before the start of the validity period. There are 96 intraday auctions and one day-ahead auction at 4:30 p.m. (download the market rules here). Balancing actors who have offered capacity must bid accordingly for these validity periods.

> An example of activation

Impact of Market Liberalization

Since the capacity auction reopened on June 19, prices have ranged from 1.89 €/MW to 150.35 €/MW, with a mean value of 18.06 €/MW for downward reserve capacity, and from 1.89 €/MW to 130.13 €/MW, with a mean price of 16.83 €/MW. The multiple auctions held throughout the day, along with the ability to participate in a previously inaccessible market, create new opportunities for monetizing battery storage. Cross-market optimization and real-time adjustment strategies become even more crucial for capturing market revenue. At StackEase, we have been working extensively to integrate the aFRR market into our solution, enabling us to develop bidding strategies that maximize profits and minimize the asset’s exposure to imbalance. If you’d like to learn how we can leverage various aspects of the aFRR market to optimize your assets’ profits, please contact us via our website.