Energy market

Below are descriptions of the three primary energy markets of interest for energy storage in the Swedish/Nordic market. If you would like to know more about these markets and how your facility can take advantage of them, feel free to contact us!

Frequency Regulation

Frequency regulation is a type of ancillary service that helps stabilize the frequency of the Swedish power grid. The grid frequency is determined by the balance between energy production and consumption, where 50.0 Hz indicates a perfect balance. When energy consumption exceeds production, the frequency decreases, and when production exceeds consumption, the frequency increases. This balance must be maintained within a narrow range to avoid negative impacts on energy security.

Svenska Kraftnät, the authority responsible for maintaining grid frequency in Sweden, has established several markets for frequency regulation, each with specific requirements for activation time, duration, and frequency intervals. These frequency markets are divided into two groups::

• Frequency Containment Reserves (FCR): Includes FFR, FCR-D up and down, and FCR-N. These reserves aim to stabilize the frequency during deviations from normal, minimizing the risk of further deviations.

• Frequency Restoration Reserves (FRR): Includes aFRR and mFRR, which are used to restore the frequency to its normal value of 50.0 Hz following a deviation..

By activating an energy storage system, such as a battery or an underground energy storage facility, in these markets, the provider is compensated by Svenska Kraftnät for activated power and, in some markets, for activated energy. Since certain markets are activated relatively infrequently—on average, only a few minutes per hour—the energy storage resource is used sparingly during activation hours. To participate in Sweden's frequency regulation markets, an energy storage resource must first undergo a prequalification process with Svenska Kraftnät. Once approved, it can offer its capacity on an hourly basis in the markets mentioned above.

Energi Arbitrage

Energy arbitrage involves buying energy when it is cheap and selling it at a higher price. Since the energy prices for the entire following day are set the day before, it is possible to identify which hours will have higher and lower prices.

By charging an energy storage system (buying energy) during low-price periods and discharging it (selling energy) during high-price periods, an operator can generate revenue. However, as energy storage systems cannot achieve 100% efficiency—meaning 1 kWh of energy input does not equal 1 kWh of output—efficiency becomes a crucial factor. The higher the efficiency of the energy storage system, the lower the costs of charging it.

Peak Shaving

Peak shaving involves using an energy storage system, often batteries, to reduce peak power demands in a facility or industrial site. Since many larger consumers today pay high demand charges based on their peak power usage, there are significant opportunities to reduce these costs with peak shaving.

Demand charges vary between electricity providers, but it is common for consumers to pay based on their highest power usage each month. This means that if a facility uses, for example, 1,000 kW for just one hour in a month, the demand charge is calculated based on that peak hour, known as the "peak demand." As the fee is typically based on a fixed price per peak demand, costs increase linearly with higher peak demands.

By reducing energy consumption during peak demand hours using an energy storage system, these charges can be significantly lowered. Additional savings may also be achieved if the facility benefits from a lower fixed electricity fee due to reduced demand and by avoiding purchasing energy during high-price hours.