Do you know your VF-FCAS from your F-FCAS? Do you know that it’s pronounced “eff-cass” and not “fucass”? Do you even care? Does anything matter anymore?

In this post, we’ll cover the basics of frequency control in the NEM with a focus on unscheduled batteries. We’ll throw in some regulatory history too, for the dedicated fan(s).

TL; DR

Frequency control ancillary services (FCAS) are procured to help manage system frequency. In the NEM, this is one of AEMO’s jobs.
FCAS is procured to maintain system frequency in between 49.85Hz and 50.15Hz (target is 50Hz).
Unscheduled BESS generally participate in Contingency FCAS (8 markets) and not Regulation FCAS (2 markets but more lucrative normally), because the technical requirements for Regulation FCAS are strict and typically cost-prohibitive for smaller sites.
If you want to participate in Contingency FCAS, you need to be (or partner with) a Demand Response Service Provider, Small Resource Aggregator, or Market Customer (a.k.a. retailer).

What is frequency control?

Like all power systems, the NEM is designed to operate within certain technical limits. One of these limits is frequency. The NEM’s frequency operating standard (FOS) defines the range of allowable frequencies for the power system, to which all electrical infrastructure must adhere.

AEMO is responsible for maintaining grid frequency in a tight band around 50Hz (the Normal Operating Frequency Band, or NOFB), bringing it back to 50Hz when it moves within the NOFB, and restoring it to the NOFB within a specified timeframe following a significant deviation.

Significant deviations in either direction can lead to the lights going out pretty quickly, and can cause electrical infrastructure (e.g. PV, batteries, appliances) to trip as a protection mechanism. So, frequency control is an important round-the-clock job.

How do you keep a power system at 50Hz?

In an AC system like the NEM, system frequency is an outcome of the supply-demand balance. When supply and demand are in perfect balance, frequency will be 50Hz. However, too much of either can lead to problems.

*Vintage FCAS analogy* *courtesy of WattClarity*

How does AEMO control frequency in the NEM?

The first way is through dispatch. AEMO’s forecasting and dispatch systems will do their best to match demand and supply. But dispatch occurs every five minutes, so any imbalance can’t be corrected through dispatch until the next interval.

This is where frequency control ancillary services (FCAS) come in. AEMO procures these to manage frequency deviations within a trading interval.

There are two broad categories of FCAS:

Regulation FCAS, used to correct minor frequency deviations within a dispatch interval, usually occurring as a result of dispatch errors or scheduled participants not conforming with their dispatch instructions.

Regulation FCAS is procured and dispatched on an ongoing basis. Participants whose bids have been accepted will be issued set-points every 4 seconds through AGC based on where AEMO wants frequency to go.

Contingency FCAS, used to arrest larger, sudden frequency deviations outside the NOFB and help restore it back to 50Hz.

These tend to occur because something big has tripped. Contingency FCAS is also procured and dispatched on a regular basis but in this case, ‘dispatched’ resources must be on standby in case something trips, and respond if it does.

In this post, we’ll be focusing on the provision of contingency FCAS by unscheduled BESS. This is because you have to be a scheduled market participant to provide regulation FCAS. As discussed here, there are reasons why operators of small BESS don’t want to be scheduled.

Tell me more about contingency FCAS, then

There are two types of contingency FCAS – Raise (R) and Lower (L), used to address deviations below and above 50Hz. These services are explained in the table below.

Now you’re ready for the next level of detail, you absolute weapon. AEMO procures four types of each service. The services are defined by the timeframe within which the provider must deliver its response. Here are the four services in each category:

A 1 second service, also called VF-FCAS (very fast FCAS) or FFR (fast frequency response). The VF-FCAS raise (R1) and lower (L1) services were introduced in October 2023 to help AEMO deal with the ongoing decline in power system inertia. A more detailed explanation of VF-FCAS and inertia is for another day in another post. The purpose of the very fast services is to arrest a sudden change in frequency.
A 6 second service (R6 and L6), also called fast FCAS. Its purpose is also to arrest a sudden change in frequency.
A 60 second service (R60 and L60), also called slow FCAS. Its purpose is to stabilise frequency.
A 5 minute service (R5 and L5), also called delayed FCAS. Its purpose is to restore frequency.

Providers of each service are required to sustain their response until the next service kicks in. Each service “hands over” to the next to keep the grid stable until AEMO can try to balance demand and supply again through central dispatch.

*This is how the AEMO control room feels most of the time.*

Providers may choose to offer any or all of these eight services if they are technically capable of doing so. AEMO does not issue instructions to activate contingency FCAS services – the services must activate automatically when grid frequency hits a predefined setpoint. AEMO determines a provider’s setpoint in the FCAS registration process, based on its use of Switching Control or Proportional Control.

Switching Control is exactly what you’d expect it to be - a control system that uses a switch to provide a predetermined amount of response, very quickly. Flexible loads tend to use this type of control system, as well as some batteries co-located with load. AEMO has historically had concerns with the possibility of over-delivery (i.e. a lot of FCAS delivered at once in response to a frequency excursion could lead to a swing in the other direction).
Proportional Control is a little more sophisticated. It’s a control system that delivers an FCAS response that is proportional to the size of the frequency deviation - small deviation = small response, large deviation = large response. AEMO generally prefers Proportional as it is more sensitive to actual grid frequency. Most batteries leverage the inverter’s droop setting to deliver this. Inadvertent changes to droop settings can cause drama though. Ooo drama.

We’ll talk about how much FCAS AEMO procures (which drives FCAS price) in a subsequent post.

How do I get in on the action?

If you’re an unscheduled BESS owner/operator/both and want in, find yourself an eligible market participant and get stuck in. A series of rule changes over recent years has opened up access to the FCAS markets to pretty much anyone who is technically capable of providing the service.

*Source - Hachiko made this too. What a talented dog!*

Market Customer or Integrated Resource Provider (i.e. the retailer) at the grid connection point, for a BESS + load or BESS-only configuration;
Small Resource Aggregator (SRA, explained further in this post) for:
- a standalone BESS configuration, or
- at a child connection point, or
- at a secondary settlement point (from Nov 2026);
Demand Response Service Provider (DRSP), e.g. a demand response aggregator or VPP provider.

Note: You may have heard people use the now-defunct term MASP (market ancillary service provider). This was the original registration category for FCAS-only participants when the 2017 rule was made, but it morphed into the DRSP category in October 2021.

No matter who you choose, make sure you’ve contracted with someone who knows what they are doing. Contingency FCAS is a 24-hour, 5-minute-by-5-minute operation, across 8 concurrent markets. You need to optimise FCAS market participation against other services in the BESS value stack, manage the complexity of site monitoring, bidding, communication, delivery and compliance, and make good economic decisions to deliver maximal returns or you could be decimating your IRRs. As you’ll see in our next post, FCAS is a high-impact, low-probability source of value, and getting it wrong could leave you feeling very sad.

If you need software to solve this problem or would just like to know more about the market and the associated processes, feel free to get in touch!

Appendices

I’m interested in the regulatory history because I’m a nerd like you

Really? Wow. Okay.

Since NEMception, the only participants that could provide contingency FCAS were Scheduled Generators or Scheduled Loads. The only eligible participants were Scheduled Generators and Scheduled Loads. FCAS prices were generally high, probably/definitely due to a lack of competition. Or not. Don’t sue me.

A rule change made effective in 2017 created the MASP category, “unbundled” the provision of ancillary services (i.e. FCAS) from the provision of energy, and consequently allowed a range of new providers to participate in the FCAS markets including unscheduled resources like BESS and flexible loads. The demand response aggregator EnerNOC (now Enel X) flew out of the gates with a portfolio of aggregated loads. While small at first, the portfolio grew and enjoyed the benefits of a market with limited price competition. Since then, more load aggregators and VPPs have joined the market (e.g. Viotas, GridBeyond), and lots of grid-scale batteries, too.

Since 2017, we’ve seen Econ 101 play out. More participants means more competition, lower prices, and less revenue to go around. There is still value in FCAS market participation and it’s a key part of a BESS value stack, but we should expect an ongoing decline in average contingency FCAS market value. It represents a ‘cost of doing business’ for AEMO and costs are recovered from participants (including people like you and I), so it’s not a great look for it to increase.

As mentioned above, the MASP has now been renamed to DRSP.

The NEM previously only contemplated connection points that could either generate (Generator) or consume (Load), not both. With the advent of battery storage, a new participant category named the Integrated Resource Provider (IRP) has also been created to allow for the recognition that some connection points are bidirectional. The Small Resource Aggregator (SRA, mentioned above) falls under the IRP umbrella.

The trapezium

Some of you may have heard about the famed trapezium.

The amount of FCAS that a co-optimised Generator is allowed to bid is capped according to the FCAS trapezium for a given output level of megawatts (MW).

The layperson’s explanation here is that if you’re enabled to deliver a certain number of MW in the energy market, the amount of FCAS you can deliver is capped at a proportion of your total MW output level according to a calculation run by AEMO. The NEM Dispatch Engine (NEMDE) can play around with this to try and deliver all services at the lowest overall cost.

The trapezium only applies to generators/loads that are Scheduled in the energy market. If you’re unscheduled, your trapezium just becomes a vertical line, i.e. your FCAS bids are considered to be standalone.

Who pays for FCAS?

We all do, baby.

In general, AEMO recovers costs for each type of FCAS from the parties deemed responsible for causing the service’s procurement.

Generators pay for Contingency Raise. This is why large solar and wind farms bid themselves out of the energy market when Contingency FCAS prices are very high. When prices are not super high, it is treated as a cost of doing business. As you will see in our next post, FCAS value tends to be concentrated into a small number of days.

Retailers pay for Contingency Lower. This is why we all have an ancillary services cost recovery component in our electricity bills (although it may not appear with that name).

Regulation FCAS is recovered using a complex method called “Causer Pays”. If you’d like to learn more about this, a decent starter can be found here.

FCAS 101