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Ancillary Services in High-Renewable Power Systems: Comparing Market Design, Emerging Trends, and Future Challenges

Andreas Makrides, Andrey Churkin, Fei Teng, Pierre Pinson

arXiv:2609.37214v1eess.SYcs.SY

TL;DR

Renewable growth and IBR deployment are changing power-system operation, while cross-system evidence on ancillary-service design remains limited and difficult to compare. This paper qualitatively reviews seven electricity systems and maps service definitions, procurement, remuneration, and participation. It identifies faster and more differentiated frequency products, more explicit stability procurement, broader provider participation, and locational procurement, while finding no convergence toward a single market design.

  • Problem

    Cross-system comparisons remain limited as renewable growth and IBR deployment change operational needs, while differences in terminology, product definitions, and procurement complicate identification of common lessons.

    Source: §1 · p. 1

  • Method

    The paper qualitatively compares official documents and academic literature across seven electricity systems using five dimensions, alongside a product classification, timing visualisations, and implementation-modality mapping.

    Source: §1 · p. 2

  • Results

    Across the reviewed systems, frequency products are becoming faster and more differentiated, stability capabilities more explicit, participation broader, and locational procurement more important, while service frameworks remain system-specific.

    Source: §1 · p. 2, §6 · p. 18

  • Takeaways & Limitations

    Different service characteristics support differentiated procurement, with standardised services suited to competitive markets and location-dependent or specialised capabilities potentially requiring targeted procurement, contracts, or technical obligations.

    Source: §6 · p. 18

    More granular products can increase complexity and fragment liquidity, while tighter locational requirements can reduce the number of eligible providers.

    Source: §5.2.4 · p. 17

Abstract

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Rapid growth in renewable generation is changing power-system operation and increasing the importance of ancillary services for security and reliability. As inverter-based resources displace conventional synchronous generation, system operators must procure a broader set of services spanning five categories: frequency control and reserves, voltage and reactive power support, system stability, restoration, and congestion management. This paper compares ancillary-service market design in Great Britain, Germany, Denmark, Italy, California, Texas, and Australia. It examines how these systems define, procure, remunerate, and coordinate services as variable renewable generation increases. The review develops a consistent product-level classification, provides comparable timing visualisations of frequency-control and reserve products, and maps implementation modalities across services and systems. Four trends emerge: faster and more granular frequency-response products, more explicit procurement of stability capabilities including inertia, system strength, and dynamic voltage support, broader participation by storage, demand-side resources, and other inverter-based resources, and greater use of locational, targeted, and technology-neutral procurement. Challenges include limited harmonisation, incomplete valuation of flexibility and stability capabilities whose value depends on location and operating conditions, barriers to participation by distributed and emerging resources, and insufficient coordination between market and operational arrangements. The comparison finds no convergence towards a single market design and supports differentiated but coordinated ancillary-service frameworks reflecting each service's technical, temporal, and locational characteristics.

1. Introduction

Renewable growth and IBR deployment are changing system operation and increasing the need for explicitly procured support capabilities. The review compares seven systems, identifying common market-design trends and challenges while finding no move toward a single design.

1. Introduction

  • Lower inertia accelerates frequency deviations, while declining short-circuit levels can complicate voltage control, fault detection, and post-disturbance recovery.These physical changes increase the need for explicitly defined and procured system-support capabilities.Source: §1 · p. 1
  • Existing studies often focus on individual services, regions, or selected design aspects, while terminology and market-rule differences complicate cross-system comparison.The paper identifies limited direct comparison under increasing renewable penetration and IBR deployment.Source: §1 · p. 1
  • The review compares ancillary-service design across Great Britain, Germany, Denmark, Italy, Texas, California, and Australia using five dimensions of market arrangements and participation.It uses a qualitative review of official documents and academic literature.Source: §1 · pp. 1–2
  • The comparison identifies challenges involving limited harmonisation, incomplete valuation, participation barriers, and weak coordination across markets and network arrangements.These challenges concern non-frequency services particularly, and capabilities whose value depends on location and operating conditions.Source: §1 · p. 2
  • The review identifies faster, more granular frequency products; explicit stability procurement; broader participation; and more locational, targeted procurement.The trends reflect increasing operational needs as synchronous inertia declines and service value depends on network location.Source: §1 · p. 2
  • Ancillary-service markets are not converging on one design; procurement and remuneration continue to reflect service characteristics, market architecture, and local needs.The paper contributes a product classification, comparable timing visualisations, and a map of implementation modalities.Source: §1 · p. 2

2. Ancillary Services in Renewable-Dominated Power Systems

Ancillary services support secure and reliable operation beyond energy delivery, and their requirements are changing as renewable and inverter-based generation expand. The section classifies these services into five categories and outlines their distinct operational roles and evolving procurement needs.

2.1. Role of Ancillary Services in Power System Operation

  • Ancillary services provide real-time tools to balance supply and demand, manage network constraints, and respond to contingencies.Their role is distinct from energy markets because services address the physical and dynamic behaviour of the system.Source: §2.1 · p. 2

2.2. Classification of Ancillary Services

  • The review groups services into frequency control and reserves, voltage and reactive power support, system stability, restoration, and congestion management.The categories provide a common structure despite differences in terminology and product definitions across systems.Source: §2.2 · p. 3

2.2.1. Frequency Control and Reserve Services

  • Frequency-control and reserve services balance supply and demand through layered responses spanning fast support, primary and secondary control, and tertiary or replacement reserves.Resources can provide active-power flexibility by increasing generation, reducing demand, discharging storage, or otherwise adjusting injections.Source: §2.2.1 · p. 3

2.2.2. Voltage and Reactive Power Support Services

  • Voltage support requires local injection or absorption of reactive power because voltage varies across network locations and reactive power has limited transferability.Its value depends on network topology, power-flow patterns, and suitable resources at specific nodes.Source: §2.2.2 · p. 3

2.2.3. System Stability Services

  • Stability services address disturbance response under low-inertia and weak-grid conditions, with inertia, system strength, and dynamic voltage support serving distinct roles.Inertia slows initial frequency decline; system strength affects voltage control and protection; dynamic voltage support assists voltage recovery and damps post-fault oscillations.Source: §2.2.3 · p. 3

2.2.4. Restoration Services

  • Restoration services enable re-energisation after a partial or complete blackout and support staged restoration of supply and demand.They are typically event-driven and procured in advance from resources with suitable technical capabilities and locations.Source: §2.2.4 · p. 3

2.2.5. Congestion Management Services

  • Congestion-management services address local or regional transmission constraints, and their value depends on a resource's network position and ability to relieve constraints.Operational solutions can reduce corrective actions and may defer or avoid reinforcement where sufficient.Source: §2.2.5 · pp. 3–4

2.3. Evolving Ancillary-Service Requirements in High-Renewable Systems

  • Higher renewable and IBR shares increase demands for faster, more accurate, and location-specific services while expanding potential participation by storage, demand-side resources, and DERs.The appropriate balance between market procurement and mandatory technical requirements remains an open design question; the study compares approaches rather than resolving it.Source: §2.3 · p. 4

3. Comparative Approach

The comparative approach examines how seven selected electricity systems respond to shared technical pressures through different institutional and operational arrangements. It uses a qualitative, document-based framework to compare service design and adaptation without ranking systems or prescribing one optimal design.

3. Comparative Approach

  • The study uses a document-based comparative framework because ancillary-service design reflects both technical drivers and system-specific regulatory and network factors.The seven systems were selected for advanced markets, rising renewable penetration, active reform, and diverse institutional and operational arrangements.Source: §3 · p. 4
  • The evidence base combines operator publications, grid codes, market rules, regulatory documents, technical reports, and relevant academic literature across five comparison dimensions.The dimensions cover service definition, procurement and remuneration, market coordination, technology access, and recent reforms.Source: §3 · p. 4
  • The comparison seeks transferable lessons and design challenges rather than ranking systems or prescribing a single optimal design.Figure 1 presents a conceptual comparison: procurement approach on the horizontal axis, service explicitness on the vertical axis, bubble size for product diversity, and colour for framework maturity.Source: §3 · p. 4, Figure 1 · p. 5

4. Comparative Analysis of Ancillary-Service Market Design

The analysis applies common comparison dimensions across five service categories to reveal cross-system differences in market design. Figure 1 offers a conceptual overview of procurement approach, explicitness, product diversity, and framework maturity.

4. Comparative Analysis of Ancillary-Service Market Design

  • The analysis compares product granularity, procurement, remuneration, coordination, technology participation, and how emerging needs translate into explicit services across the five categories.Source: §4 · p. 5
  • Figure 1 maps procurement approach horizontally and the degree of explicit product definition vertically, with bubble size indicating product diversity and colour indicating framework maturity.Source: §4 · p. 5
  • Figure 1 is a conceptual comparison of market frameworks, not a quantitative ranking.It provides a visual basis for the detailed comparisons in the following subsections.Source: §4 · p. 5

4.1. Service Design and Product Classification

This section compares how ancillary-service products are defined and procured across systems in response to technical, temporal, and locational needs, covering frequency, voltage, stability, restoration, and congestion arrangements. It also considers implementation modalities for congestion management, including targeted services, operational redispatch, and nodal market clearing, which vary with system and network conditions.

4.1.1. Frequency Control and Reserve Services

  • Frequency services retain a layered structure, but systems differ in product granularity and integration with energy markets.Germany, Denmark, and Italy use a common FCR–aFRR–mFRR hierarchy, with additional fast products in Denmark and Italy; Great Britain and Australia offer more differentiated products, while Texas and California coordinate energy and reserves through co-optimisation. The trade-off is between cross-border standardisation, tailored fast response, and market complexity.Source: §4.1.1 · pp. 5–8

4.1.2. Voltage and Reactive Power Support Services

  • Voltage and reactive-power support is inherently locational, so systems generally combine mandatory technical capability with differing arrangements for additional support.Great Britain and Germany supplement baseline obligations with market-based procurement; California and Australia rely more on contractual or non-market arrangements, while Italy, Denmark, and Texas lean more on technical obligations and operator actions. Great Britain’s targeted tenders illustrate procurement tailored to specific network needs.Source: §4.1.2 · pp. 8–9

4.1.3. System Stability Services

  • Stability services are less harmonised and less mature than frequency services, with procurement ranging from explicit markets to technical requirements and operational measures.Great Britain is developing stability procurement for inertia, short-circuit level, and dynamic voltage support; Germany is developing market-based inertia services, while Italy and Denmark mainly rely on technical requirements and rapid response that complements rather than replaces physical inertia. Texas and California emphasize operational measures and advanced controls, and Australia uses network-support and transitional-service frameworks.Source: §4.1.3 · pp. 9–10

4.1.4. Restoration Services

  • Restoration capability is secured mainly through regulated, contractual, tendered, or operational arrangements rather than continuously traded ancillary-service markets.Procurement is system-specific: Australia uses a dedicated system restart ancillary service, while Italy relies mainly on mandatory location-specific grid-code requirements; other reviewed systems use tenders, long-term arrangements, bilateral agreements, or administrative and contractual mechanisms.Source: §4.1.4 · p. 11

4.1.5. Congestion Management Services

  • Congestion management is handled through redispatch, regulation, or targeted services in some systems, but is embedded in nodal energy-market dispatch in Texas and California.Germany uses redispatch, Denmark uses regulation, and Italy uses extraordinary modulation when standard balancing and redispatch are insufficient; Texas uses real-time security-constrained economic dispatch and California uses day-ahead and real-time locational marginal pricing.Source: §4.1.5 · p. 11
  • Targeted services address constraints beyond routine dispatch, including Great Britain's TCMS and Australia's RSAS and MBAS within the NSCAS framework.Australian RSAS and MBAS can address network-security or transfer-capability limitations beyond routine market dispatch.Source: §4.1.5 · p. 12
  • Congestion management is less suited to uniform product standardisation because its value depends on constraint location, severity, and duration.Its design is shaped by network topology, market architecture, and system-operator practices.Source: §4.1.5 · p. 12
  • Frequency control and reserves are most consistently formalised, while voltage support and stability vary more; restoration is typically contractual, tendered, or regulated, and congestion approaches range from redispatch to nodal clearing.Figure 5 compares dominant implementation approaches across five service categories and seven systems; its circle styles distinguish structures, not market maturity or performance.Source: §4.1.5 · p. 12

4.2. Procurement and Remuneration Mechanisms

Ancillary-service procurement and remuneration vary with service needs, investment horizons, and institutional arrangements. Their design must align procurement timing, pricing, and payment components to balance operational responsiveness with investment predictability.

4.2. Procurement and Remuneration Mechanisms

  • Procurement uses recurring auctions, targeted tenders, or bilateral contracts, trading off transparent short-term price signals against specialised or location-specific capability.Auctions need liquid markets, clear products, and qualification rules; tenders and contracts can secure capability over longer horizons but may provide less transparent prices and less responsive terms.Source: §4.2 · p. 12
  • Short-term procurement adjusts volumes as conditions change, while longer-term arrangements can assure availability for specialised assets, location-specific needs, or new investment.Grid codes, connection requirements, and operator instructions can establish capability obligations but may provide weaker investment and participation incentives.Source: §4.2 · p. 12
  • Market-clearing prices commonly remunerate standardised services procured through recurring auctions or integrated clearing, whereas targeted tenders and contracts more often use pay-as-bid or contract-specific terms.Contractual terms can reflect capability, location, and availability period; payment components separately determine whether availability, utilisation, testing, or other activities are compensated.Source: §4.2 · p. 12
  • Fixed or regulated payments often accompany mandatory or administratively specified capabilities, but provision and remuneration are distinct design choices.Great Britain’s ORPS combines mandatory reactive-power capability with fixed-price remuneration, while Italian inertia generally receives no direct payment; German market-based inertia arrangements also use fixed prices.Source: §4.2 · pp. 12–13
  • Procurement horizons, pricing rules, and payment components jointly shape incentives for availability, delivery, and investment, so they must balance operational responsiveness with revenue predictability.Predictability is particularly relevant for specialised or location-specific assets.Source: §4.2 · p. 13

4.3. Technology Participation and Market Access

Participation is increasingly based on demonstrated performance rather than technology type for frequency-control and reserve services, while other services impose stronger capability and locational conditions. Access across categories depends on qualifying the resource for the specific service and network need.

4.3. Technology Participation and Market Access

  • Frequency-control and reserve participation increasingly depends on demonstrated performance rather than technology type, widening opportunities for storage and demand-side resources.These resources suit fast-response products, but must meet product-specific requirements for speed, sustainment, availability, telemetry, and prequalification.Source: §4.3 · p. 13
  • Voltage support and system-stability access is more selective because eligibility depends on connection point, physical capability, and performance under relevant network conditions.IBR participation may require grid-forming or other advanced controls and technical validation; suitability depends on configuration and location as well as technology type.Source: §4.3 · p. 13
  • Restoration and congestion-management access also depends on service-specific qualification and location, including testing for storage and verified network impact for DER aggregations.Across all five categories, technology-neutral participation is most developed for frequency-control and reserve services; expanding access requires proportionate qualification, telemetry, aggregation, and verification rules while maintaining security standards.Source: §4.3 · p. 13

4.4. Market Structure and Coordination

The reviewed systems coordinate energy, balancing, network constraints, and ancillary services through different combinations of common platforms, separate mechanisms, and integrated dispatch. Locational and system-security needs commonly remain outside shared or integrated market clearing.

4.4. Market Structure and Coordination

  • Germany, Italy, and Denmark use common European energy and balancing platforms alongside national or zonal mechanisms, while Great Britain uses separate but interacting frameworks and Texas, California, and Australia rely more on centralised dispatch and integrated clearing for frequency-related services.None of these arrangements removes the need for separate mechanisms when service value depends strongly on location, network conditions, or specialised security requirements.Source: §4.4 · pp. 14–15
  • European platforms support cross-border energy trading and balancing, but national or zonal intervention remains necessary for congestion, voltage, stability, restoration, and other locational requirements.Germany’s single bidding zone leaves internal constraints outside the energy-price signal; Italy combines European coupling and zonal prices with dedicated dispatching arrangements, while Denmark’s two zones span different synchronous areas.Source: §4.4 · p. 14
  • Great Britain trades most energy before delivery and uses the Balancing Mechanism, ancillary-service arrangements, and short-term trading near real time rather than a single jointly cleared energy-and-ancillary-services platform.Service-specific procurement allows targeted products but requires coordination with balancing actions and real-time dispatch.Source: §4.4 · p. 15
  • Texas and California co-optimise energy and ancillary services in nodal market processes, while Australia co-optimises energy and FCAS in five-minute regional dispatch.Australia coordinates stability, restoration, and network support through separate arrangements; California’s interconnections make imports, exports, transfer capability, and deliverability more prominent than in ERCOT.Source: §4.4 · p. 15

5. Challenges, Trends, and Market Design Implications

The comparison identifies challenges in harmonising service frameworks, valuing capabilities whose contribution depends on location and conditions, enabling emerging resources, and coordinating market and operational mechanisms. These challenges are especially pronounced for non-frequency and locational services.

5.1.1. Limited harmonisation, particularly for non-frequency services

  • Frequency-control and reserve products increasingly use common definitions and balancing arrangements, while non-frequency services remain system- and location-specific in technical requirements, procurement, and remuneration.Cross-border energy and balancing platforms have strengthened coordination but harmonisation across ancillary-service categories remains uneven.Source: §5.1.1 · p. 15

5.1.2. Incomplete valuation of flexibility and stability capabilities

  • Uniform pricing is harder for inertia, system strength, voltage support, and restoration because their value depends on location, system conditions, and alternative resources.Tenders, contracts, regulated payments, or obligations may provide less transparent investment signals; explicit stability procurement in Great Britain and emerging German inertia arrangements are moves toward more explicit valuation.Source: §5.1.2 · p. 15

5.1.3. Participation barriers for emerging resources

  • Emerging resources can provide fast response and other dynamic support, but access requirements may disproportionately burden smaller or non-traditional providers when not technology-neutral and performance-based.Requirements include prequalification, size thresholds, telemetry, control, response, sustainment, state of charge, and location; in Great Britain’s mid-term stability market, no contracts were awarded to BESS.Source: §5.1.3 · p. 16

5.1.4. Coordination across energy, balancing, ancillary services, and network operation

  • No reviewed system fully integrates all ancillary-service requirements into one market-clearing framework, and non-frequency needs often remain outside energy and frequency-service coordination.The design challenge is coordinating energy, balancing, network constraints, and security services without losing each service’s specific characteristics.Source: §5.1.4 · p. 16

5.2. Emerging Trends Across Ancillary-Service Markets

Across the reviewed systems, ancillary-service markets are developing faster frequency products, more explicit stability procurement, broader resource participation, and more locational procurement. These trends remain differentiated by service requirements and local conditions.

5.2.1. Faster and more granular frequency-control products

  • Declining synchronous inertia increases the speed of frequency change after disturbances, driving demand for faster response and more differentiated frequency products.Examples include dynamic frequency response in Great Britain, UFFR in Italy, FFR in Denmark, fast-response services in Texas, and very fast FCAS in Australia.Source: §5.2.1 · p. 16

5.2.2. More explicit procurement of stability-related capabilities

  • As synchronous generation is displaced, inertia, short-circuit level, dynamic voltage support, and system strength are increasingly identified and procured explicitly.Great Britain has dedicated stability procurement frameworks, Germany is moving towards explicit inertia procurement, and Australia uses network-support and transitional arrangements.Source: §5.2.2 · p. 16

5.2.3. Broader and more performance-based participation

  • Eligibility increasingly depends on service-specific performance, expanding opportunities for storage, demand-side resources, DER aggregations, and suitably controlled inverter-based resources.Access remains more selective for voltage, stability, restoration, and network-support services, where value depends more strongly on location and physical system interaction.Source: §5.2.3 · p. 16

5.2.4. Increasing locational and targeted procurement

  • Locational procurement is increasingly used for services whose value depends on network topology and local operating conditions.Targeted tenders, zonal requirements, and network-support arrangements can specify where capability is required; this may become more important as resources and constraints become geographically concentrated.Source: §5.2.4 · p. 16
  • More differentiated frameworks can improve operational precision and reveal implicit service needs, but granular products may fragment liquidity and tight location requirements may reduce eligible providers.The synthesis presents challenges and trends as parallel findings, not one-to-one relationships.Source: §5.2.4 · p. 17, Figure 6 · p. 17

5.3. Market Design and Regulatory Implications

The paper argues for matching procurement and participation rules to each service’s technical and locational characteristics. It favors coordination where requirements can be represented adequately, alongside targeted or longer-term arrangements for context-dependent capabilities.

5.3. Market Design and Regulatory Implications

  • Frequently procured, standardised services such as frequency control and operating reserves generally suit recurring auctions, market clearing, and coordination with energy markets.Services dependent on location, specialised capability, infrequent conditions, or longer-term availability may instead need targeted tenders, bilateral contracts, technical obligations, or longer-term procurement.Source: §5.3 · p. 17
  • Participation rules should reflect required capability rather than technology type where technically feasible, without implying identical access conditions across services.Performance-based requirements can admit capable grid-forming IBRs, DERs, aggregators, and demand-side resources while retaining service-specific qualifications.Source: §5.3 · p. 17
  • Location- and condition-dependent stability and network-support services can be difficult to finance through short-term revenues alone, increasing investor risk and potentially discouraging investment.Longer procurement horizons, transparent future-needs assessments, locational signals, and predictable contracts can reduce some uncertainty for assets such as synchronous condensers and grid-forming IBRs.Source: §5.3 · p. 17
  • Co-optimisation can improve efficiency when service requirements, network constraints, opportunity costs, and capacity interactions can be represented adequately.Targeted procurement remains appropriate for highly context-dependent, difficult-to-standardise, or longer-term capabilities, so future frameworks may combine both approaches.Source: §5.3 · pp. 17–18
  • Procurement horizons, remuneration, participation rules, and market integration should reflect each service’s technical requirements, delivery timescales, and locational value.The paper presents differentiated but coordinated arrangements as a way to support broader technology participation while maintaining system security.Source: §5.3 · p. 18

6. Conclusions

The review finds that ancillary-service frameworks remain diverse, with frequency and reserve products more consistently formalised than services whose value depends on location and system conditions. It concludes that service-specific arrangements and effective coordination, rather than a single market design, are needed.

6. Conclusions

  • Frequency-control and reserve services are the most consistently formalised through explicit products and market mechanisms, while voltage, stability, restoration, and congestion services remain more system-specific.The latter rely more heavily on targeted tenders, contracts, technical obligations, regulated arrangements, or system-operator actions.Source: §6 · p. 18
  • Across the reviewed systems, frequency products are becoming faster and more differentiated, stability capabilities more explicit, participation more performance-based, and locational procurement more important.Storage, demand-side resources, DER aggregations, and appropriately controlled IBRs are expanding the range of potential providers, subject to service-specific requirements.Source: §6 · p. 18
  • Challenges include limited harmonisation of non-frequency services, incomplete valuation of locational capabilities, participation barriers for emerging resources, and weak coordination across markets and network operation.The review says these challenges do not require convergence on one market structure; standardised services may suit short-term competition, while specialised or investment-intensive capabilities may need tailored arrangements.Source: §6 · p. 18
  • Future frameworks should combine service-specific arrangements with effective coordination to support short-term operation and investment in flexibility and system-security capabilities.The paper frames this conclusion in the context of expanding renewable generation and other IBRs.Source: §6 · p. 18

A. Appendix

The appendix provides a table of ancillary-service characteristics organized by country or system operator and category, with symbols defining category and service attributes.

A. Appendix

  • Table 4 presents ancillary-service characteristics by country or system operator and category.The caption identifies the table’s scope but does not state specific country-level values.Source: Table 4 · pp. 19–22
  • The category symbols distinguish frequency control and reserves, voltage and reactive support, system stability, restoration, and congestion management.The table’s directionality and symmetry indicators describe upward or downward service requirements and whether requirements are symmetric.Source: A. Appendix · p. 22
  • Activation time is measured relative to the disturbance, while full availability and duration are measured from activation time.The appendix marks the latter reference as t + x.Source: A. Appendix · p. 22
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