Powering the Future: How FCR and EV Charging are Shaping a Smarter, Greener Grid

Understanding Frequency Containment Reserve in EV charging

FCR: A major revenue opportunity for Charging Point Operators

Frequency Containment Reserves (FCR) , or primary reserves, constitute a €300m annual market if you value the total demand of the Continental European Grid (= 3.000 MW) at the average market price in Germany in 2023 (around €50/MW for a 4-hour block).  

European FCR market overview

In Europe, nine countries are now sharing a common auction platform for procuring FCR, totalling around half the European demand. Each country has an own demand, depending on the country size. In addition, there are some limits to export and some core local demand to respect, leading to price differences.  
It is a relatively interesting market to follow.

Key market observations:

On the left side in the Figure below, you can see the average market prices per month and per hour (NB: the market is divided into 6 blocks of 4 hours per day) for 4 countries. On the right side, you can see the surplus, or the deficit, for the same 4 countries.

• France is—for now—supplying very cheap FCR

• Germany experienced a "solar effect"

• Since August 2023, Belgium has had very expensive FCR and a constant deficit

• Netherlands is always in deficit, but prices are more aligned with Germany. Except for the period where prices skyrocketed to €77,777/MW on 2 November 2023 for the block 4 PM to 8 PM

What is FCR and why it matters?

Frequency Containment Reserve is crucial in safeguarding the stability and reliability of the power grid. It is a mechanism for balancing the electrical system, rapidly adjusting power output or consumption in response to frequency fluctuations. This balance is vital for averting power disruptions and guaranteeing an uninterrupted electricity supply. Governed by the Commission Regulation (EU) 2017/2195, FCR is a cornerstone of the electricity balancing guidelines. These regulations aim to promote competition, fairness, and transparency in balancing markets, whilst upholding secure grid operations and consistent energy supply. As the adoption of renewable energy and electric vehicles intensifies, the role of FCR in energy markets becomes increasingly critical, highlighting its importance in modern power management strategies.

Importance of FCR in the modern grid

As the adoption of renewable energy and electric vehicles grows, FCR’s role in stabilising energy markets becomes increasingly critical. It ensures fair, competitive, and transparent energy balancing.

Types of FCR products

1. Frequency Containment Reserve for normal operation (FCR-N)

Frequency Containment Reserve for Normal Operation (FCR-N) and Frequency Containment Reserve for Disturbances (FCR-D) are active power reserves that are automatically controlled based on the frequency deviation. Their purpose is to contain the frequency during normal operation and disturbances. FCR-N aims to keep the frequency within the standard frequency range of 49.9 Hz to 50.1 Hz.

2. Frequency Containment Reserve for disturbances (FCR-D)

FCR-D aims to limit the frequency deviation to 49.5 Hz or 50.5 Hz when the frequency goes outside the standard range. FCR-N is a symmetrical product that must be capable of both up- and downregulation. Upregulation means increasing power production or decreasing consumption. Downregulation means decreasing power production or increasing consumption. FCR-D is divided in separate up- and downregulation products. Entities that have difficulties to comply with the dynamic requirements, e.g. activation/deactivation performance and dynamic stability can provide a variant of FCR-D called “Static” FCR-D. The main difference from regular FCR-D (referred to as “Dynamic” FCR-D) is a grace period of 15 minutes where the entities are not required to deactivate and/or to be able to perform a second activation.

How FCR works in the European electricity market

In the European electricity market, the mechanics of FCR are governed by a collaborative framework involving various Transmission System Operators (TSOs) from multiple countries. These TSOs, including those from Austria, Belgium, Czechia, Denmark, France, Germany, the Netherlands, Slovenia, and Switzerland, procure their FCR needs through a shared market. This process is conducted via daily auctions, offering four-hour symmetric products, where both upward and downward FCR are procured together.

FCR cooperation and market design

The FCR Cooperation functions under a TSO-TSO model, where a common merit order list is used to pool offers received by each TSO. Contracts and interactions with Balancing Service Providers (BSPs), however, are managed on a national level, ensuring localized responsibility and delivery. This system fosters a close collaboration among TSOs, National Regulatory Authorities (NRAs), and stakeholders, ensuring effective market design and optimization while maintaining grid security.

The evolution and expansion of FCR cooperation

The FCR cooperation, crucial in European power grid stability, has seen significant evolution and expansion since its inception in 2017. Initially, the collaboration involved TSOs from Austria, Belgium, Germany, the Netherlands, and Switzerland. The cooperative framework was designed in line with the Electricity Balancing Guideline, with a focus on effective market design. Since then, it has grown to include France, Western Denmark, Slovenia, and most recently, the Czech Republic in March 2023. This expansion reflects a growing recognition of the importance of coordinated efforts in grid balancing and FCR management. The cooperative's development, informed by public consultation and ongoing adaptations, underscores its commitment to maintaining grid stability across an increasingly interconnected European power system.

FCR Market & Procurement Insights

The market dynamics of FCR in Europe are defined by a set of carefully structured procurement principles. Participating countries, including Austria, Belgium, the Czech Republic, Denmark, France, Germany, the Netherlands, Slovenia, and Switzerland, jointly procure FCR in a common market. This market is characterized by daily auctions for symmetric products, typically spanning four hours. The minimum bid size is set at 1 MW, with a resolution of 1 MW, while indivisible bids can be up to 25 MW. The market is also regulated by specific constraints such as core shares and maximum transfer capacities, which serve as limits within the FCR market. These parameters ensure a balanced and efficient procurement process, catering to the diverse needs of the grid while optimizing costs for the cooperative as a whole

Optimizing FCR Procurement

In the procurement of FCR, optimization principles are key to ensuring efficiency and cost-effectiveness. Daily, TSOs engage in market-based tenders, with a specific Gate Opening and Closure Time for bid submissions. The bids are then processed through an optimization algorithm, which considers various constraints like core shares, export limits, and internal limits for FCR exchange. The primary objective is to meet the demand of all participating countries while minimizing procurement costs. Under certain conditions, such as when export limits are hit, the algorithm may lead to different pricing outcomes like Local Marginal Prices (LMP) and Cross Border Marginal Prices (CBMP), ensuring that the most effective combination of bids is selected for grid stability

Special cases in FCR bidding process

The FCR bidding process encompasses special cases to address specific market scenarios. In instances where multiple optimal solutions exist for covering a country's demand, priority is given to bids from that country, limiting excessive cross-border exchanges. Furthermore, the algorithm differentiates between divisible and indivisible bids. Indivisible bids must be either fully awarded or not at all, while divisible bids allow any quantity between zero and the offered amount to be awarded. This distinction is crucial, as it prevents paradoxical rejections, ensuring that low-price bids are not overlooked in favour of higher-priced ones, thus maintaining market efficiency and fairness

FCR & EV Charging: A synergistic relationship

The integration of Electric Vehicle (EV) charging into the FCR ecosystem presents a synergistic opportunity. EVs, with their growing prevalence, can act as a dynamic and flexible load on the power grid. Through smart charging technologies, EVs can either draw power during times of excess generation or reduce charging rates when the grid experiences high demand, thereby assisting in frequency stabilization. This bi-directional relationship not only enhances grid stability but also opens up new possibilities for EV owners and CPOs to participate in energy markets. By aligning charging patterns with grid needs, EVs effectively become mobile energy storage units, contributing to FCR mechanisms. This integration not only supports grid health but also promotes efficient energy use, paving the way for a more sustainable and resilient power infrastructure.  

How FLEXECHARGE helps CPOs participate in the FCR market

Our innovative offering aligns seamlessly with Frequency Containment Reserve practices, offering a unique approach to EV charging. By implementing smart load management on all charging sites and aggregating them through our platform, HARMON-E, we enable charging operators to dynamically adjust EV charging in response to grid demands, supporting FCR mechanisms. This integration stabilizes grid frequency through controlled charging, transforming EVs into valuable assets for the grid.  With our platform, charging operators can effortlessly prepare their network to operate as a Virtual Power Plant (VPP).

Our service delivers real-time data and analytics, optimizing energy usage and giving charging solution providers a competitive edge. Its flexibility supports grid stability and boosts FCR efficiency, representing a major advancement in sustainable energy management.

The future of FCR and EV charging integration

In closing, the integration of Frequency Containment Reserve (FCR) with the next-gen electric vehicle (EV) charging infrastructure offers a powerful solution for grid stability, energy sustainability, and new revenue opportunities for CPOs, with the "Ancillary Services" market already valued at €300m annually.

As FCR continues to evolve across Europe, its partnership with EV charging will become increasingly vital. Cutting-edge innovations in smart charging and energy management, like ours, will play a pivotal role in shaping this future.

Looking ahead, we’re on the cusp of groundbreaking advancements in grid balancing, stronger collaborations among TSOs, and more dynamic market frameworks. These developments will not only bolster grid resilience but also drive a greener, more efficient, and profitable energy ecosystem.

Curious about how your charging network can tap into the FCR market?