Grid services: Capture rewards for stabilising the electricity grid

What are grid services and how do they work?

Grid services are essential functions of the electricity grid, ensuring its stability, reliability, and efficiency.

The grid must remain balanced at all times and across different locations. This means that supply (generation) and demand (consumption) must match within a very small tolerance range.

Maintaining this balance is an extremely complex task within a system comprising tens of millions of consumers and hundreds of thousands of producers—ranging from rooftop solar to large nuclear power stations. Imagine an interconnector failing or a power station unexpectedly shutting down—this would immediately create a massive imbalance. However, the grid can sustain such imbalances only for short periods before serious damage occurs.

If an imbalance persists for too long, the grid may fail, potentially leading to a blackout.

Grid services fulfil three essential functions:

Balancing macro-level supply and demand

In the context of the electricity grid, balance means ensuring that supply and demand remain equal. Initially, wholesale markets allow buyers and sellers to trade electricity. The point where supply meets demand determines the wholesale price.

However, wholesale trades take place between one day and one hour before electricity is actually needed. This means that there will always be differences between the traded amount and the actual consumption or production.

For instance, imagine you are operating a large wind farm. You may predict your expected generation and trade accordingly in wholesale markets. However, these forecasts are never 100% accurate, and wind conditions may not be as strong as expected.

This is where grid services come into play—bridging the gap between forecasted and real-time electricity volumes. Producers and consumers can bid into different markets to turn up / down their consumption or production in the short term, between 60 minutes and 2 minutes ahead.

Fine-tuning frequency

The UK electricity grid operates at a frequency of approximately 50 Hz, with a tolerance range of only 0.2–0.5 Hz. If frequency deviates beyond this narrow range, it can cause severe grid instability.

Frequency fluctuations can occur due to unexpected power plant outages or failures in transmission infrastructure. In such cases, grid services are rapidly deployed to restore frequency back to 50 Hz almost in real time, just minutes to seconds ahead.

Reducing infrastructure costs

The UK electricity grid is undergoing a fundamental transformation. The increasing reliance on intermittent renewables, along with rising peak demand from technologies such as EVs and heat pumps, is placing greater strain on the system.

To manage this challenge, grid operators must decide whether to invest billions into infrastructure upgrades—such as new power lines and substations—or to adopt a more flexible approach. Rather than reinforcing the grid to handle peak loads, a more efficient alternative is to incentivise consumers and producers to adjust their consumption patterns, reducing stress on the system when demand is highest (see Figure 1). In most cases, this flexibility-based approach proves to be more cost-effective, and grid services play a vital role in enabling it.

What types of grid services exist?

A broad range of grid services exist, each with different characteristics and varying degrees of suitability for distributed energy resources (DERs) such as home batteries, heat pumps, or EV chargers.

The top five services, ranked by suitability for DERs, are:

1. Local flexibility markets: Manage imbalances at the most localised level of the grid—the distribution grid. These markets offer particularly high value but are only available for certain postcodes (about 10% of UK households).
2. Demand flexibility services: Reward consumers for reducing electricity demand during peak times. Previously delivered very high value but are currently being reformed.
3. Capacity markets: Preventative markets that pay participants to remain on standby in case of grid stress events. Have never been activated to date, but participants can still earn money for their availability.
4. Balancing markets: Balance UK electricity supply and demand in real-time. Participants receive notifications 2 to 60 minutes before the electricity is needed. Can be high value on certain days.
5. Frequency response services: Maintain grid frequency at 50 Hz, responding even faster than balancing markets—within seconds to minutes. Can offer high value, but participation has very high technical requirements.

Most of these services are “stackable”, meaning they can be combined to maximise revenues. In some cases, your battery can deliver multiple services simultaneously using the same capacity. This allows you to earn from two services in parallel. For other services, stacking is only possible after completing delivery of another service or by splitting your battery’s capacity between them.

The downside of stackability is that it introduces significant complexity. A battery must continuously assess the best market opportunities, while considering contractual obligations and stacking rules, to optimise its capacity usage.

Fortunately, you don’t need to worry: Software like [Capture AI] automates this process for you.

How much can I benefit?

A 10 kW home battery can generate annual benefits of £200–1,000 from grid services in local flexibility, DFS, and balancing markets—on top of all the other savings your home battery provides!

There are two main reasons for this wide range in revenue. First, local flexibility markets, which are particularly lucrative, are not available to everyone (Check here to see if your postcode qualifies). Second, the UK electricity market is complex and volatile. Earnings depend not only on how effectively your aggregator markets your capacity but also on market conditions such as weather patterns and global commodity prices.

At Capture, we believe transparency is key. That’s why [Capture AI] includes a ledger that shows exactly how much your battery has earned across different flexibility markets and what share Capture receives for optimising and marketing your battery in those markets.

How can I participate?

You cannot directly participate in flexibility markets; instead, you need to engage a so-called “aggregator” to market your battery on your behalf. An aggregator pools a large number of small-scale assets to meet the minimum participation threshold, which is usually 1 MW (about 100–300 home batteries, depending on size). Your aggregator continuously scans for the best opportunities in the market, places bids on your behalf, and receives a share of the revenues in return.

Capture can act as your aggregator, and [Capture AI] will automatically identify the best opportunities for you. Get started with the form below!