Reserve markets explained: how can batteries earn revenue?

Why does someone pay for a battery to be ready?

Electricity generation and consumption must remain in balance. If a factory uses more than expected or a power plant disconnects, the system needs resources that can respond. Statnett is Norway’s transmission system operator and buys these reserves.

Think of it as being on call: a resource is paid to be ready when needed. Unlike ordinary electricity sales, some of the value comes from the ability to respond, not just the kilowatt-hours delivered.

Statnett: payment for flexibility

What does the battery actually do?

Upward regulation means the system needs more injection or less consumption. A battery might discharge more or reduce charging. Downward regulation is the reverse: it might charge more or reduce discharging.

The change from planned operation matters. A charging battery does not necessarily have to start exporting electricity to provide upward regulation. Control must stay within the battery’s limits and the site’s grid connection constraints.

How do spot prices, capacity and activation differ?

These are three different parts of the energy economics. Activation is not paid the same way in every reserve product. Revenue and costs must follow the rules of the product you will actually deliver.

Statnett: payment for flexibility

What do FCR, FFR, aFRR and mFRR mean?

The abbreviations describe different balancing tasks. You do not need to choose a market yourself. First establish which services the installation can deliver and which fit your operations.

1 MW: an example exceeding NOK 1 million in capacity payments

A battery with 1 MW of available, qualified power can represent a substantial revenue opportunity. Our price-based illustration produces approximately NOK 1.30 million in annual capacity payments across three markets at different times. A separate assumed activation scenario adds to this. These are receipts before other costs, not a guarantee or documented customer earnings.

The capacity calculation uses Statnett’s published hourly prices for the full year 2025 in NO1, for 1 MW. We use a fixed illustrative exchange rate of NOK 11.50/EUR and reduce calculated payments by 10% as a simple availability and delivery assumption. This is not a measured bid-acceptance rate. Missing data or hours with less than 1 MW procured contribute zero.

The illustrative installation is a 1 MW / 2 MWh battery. MW describes offered power; MWh describes stored energy. The calculation does not simulate state of charge, bid acceptance, activation or technical qualification. The installation’s ability to deliver throughout the periods must be established before using these figures in a proposal.

Statnett: reserve-market data (2025, NO1)

How 1 MW is allocated across three markets

The same MW is reserved only once per hour. The example uses a fixed daily schedule in Norwegian local time: FCR-N D-1 from 00–08, aFRR up from 08–16 and mFRR up from 16–24. This simple allocation was selected without looking at prices; it does not pick the highest price with hindsight.

Each window contains 2,920 hours in 2025. The data provides 2,920, 1,962 and 2,824 hours respectively with a price and at least 1 MW procured in the selected windows. We sum these hourly prices and apply the same exchange rate and 10% reduction to all three markets.

An operating strategy must account for auction timing, accepted commitments, recharging, recovery and available energy. Markets cannot be switched freely once capacity has been sold. Enfy EMS can coordinate use within technical and contractual limits.

Capacity payment alone does not mean the battery remains unused. It must still be ready and respond as the product requires. The example separates payment components; it does not promise income without physical delivery.

Statnett: reserve-market data (2025, NO1)

Additional revenue when the battery is activated

Capacity payment covers keeping agreed power available. In a product with energy settlement, actual activation may bring additional receipts. Here we add a separate hypothetical mFRR-up example during hours already allocated to mFRR. We do not add another capacity payment for those hours.

We assume 200 MWh delivered over the year, equivalent to 200 full-power hours at 1 MW, spread across multiple events with recharging between them. At an assumed average receipt of NOK 2,000/MWh, this gives NOK 400,000. Activation volume and price are scenario assumptions, not observations from Statnett’s capacity data.

At 90% round-trip efficiency, 200 / 0.90 = 222.22 MWh must be purchased to recharge. At an assumed energy price of NOK 600/MWh, this costs approximately NOK 133,333. The additional contribution after this energy cost is approximately NOK 266,667, before grid charges, taxes, wear, fees and other settlement items.

This addition does not automatically apply to every market. Statnett states, for example, that FCR-D activation is not compensated. FCR-N and aFRR have their own energy settlement, which is not modelled here and can also produce costs. Price, regulation direction and contract determine the net effect.

Statnett: activation payment and settlement

How do delivery and battery size affect the opportunity?

Keeping 1 MW available throughout the year differs from reserving much of the battery for backup and your own demand peaks. The table applies different uniform reductions to the same historical price basis. It does not identify specific lost hours; missing high-price periods can have a larger effect.

At exactly the same prices and assumptions, 2 MW of qualified power would give approximately NOK 2.61 million in capacity payments. Doubling activation volume in the same example gives about NOK 3.14 million after the modelled recharge cost, before other costs. This is mathematical scaling, not evidence of bid acceptance or market demand. Storage capacity, grid connection and actual availability must also scale.

Multiple markets are not automatically better than one. Using only FCR-N D-1 throughout the year, the same price-based method gives approximately NOK 1.71 million for 1 MW after the 10% reduction, before energy settlement and other costs. The fixed three-market schedule illustrates revenue sources; it does not demonstrate an optimisation uplift.

Statnett: reserve-market data (2025, NO1)

What does the customer keep?

The main example shows approximately NOK 1.70 million in total receipts, or NOK 1.57 million after modelled recharge energy. Neither is the customer’s net profit. FCR-N and aFRR energy settlement, other energy use, grid charges, revenue sharing, operations and wear must also be included.

Establish who receives market settlement and what deductions apply. Ask for capacity, activation, energy and other costs to be shown separately. Purchase cost, financing and tax must also be assessed to calculate investment return.

• Agreed fees or revenue shares for the market participant and service provider.
• Energy purchases, charging and discharging losses, grid tariffs and any imbalance costs.
• Battery wear, warranty usage limits, service, software and communications.
• Periods without accepted bids, maintenance, technical downtime and any deductions for non-delivery.
• Capacity retained for building operations or power-outage backup.

Who does what, and how do you get started?

The site owner sets the boundaries: what the building needs, how much backup to retain and acceptable risk. Enfy supplies energy management and project work. The specific contract must identify who submits bids, carries delivery responsibility and settles revenue.

An aggregator combines flexibility from several resources. BSP means Balancing Service Provider, a formal market role for products including aFRR and mFRR. There is no single agreement for every product: according to Statnett’s current guidance, supplying only FCR does not require a BSP agreement.

• Assess the battery, grid connection, metering and consumption profile.
• Identify suitable products and model revenue with explicit assumptions.
• Agree on contracts, responsibilities, revenue sharing and operating limits.
• Document and test compliance with the technical requirements: this is prequalification.
• Begin delivery once the necessary approvals and systems are in place, then track actual performance.

Statnett: agreements and market roles

What should you ask before making a decision?

Ask for cautious, central and favourable scenarios with documented assumptions. Also test lower prices, fewer accepted delivery hours and periods with no market income. Multiplying the best month by twelve is not a sound annual budget.

An annual model should identify market and price area, data period, currency and conversion, available MW, paid hours, expected activation and net results after costs. Results from different markets cannot simply be added together when they require the same capacity at the same time.

Bring battery power in kW, capacity in kWh, address or price area, consumption data and backup needs to your discussion with Enfy. If you do not have a battery yet, start with the building’s needs. The Vikersund project illustrates solar, storage, EMS and market integration, not guaranteed revenue for other installations.

Statnett: reserve market calculator

Questions and answers