How Swedish batteries can finally get into aFRR

Last month, at its annual Balancing Day, the Swedish Transmission System Operator (TSO), Svenska kraftnät (SvK), announced its interest in allowing more prequalified capacity into its automatic Frequency Restoration Reserve (aFRR), ahead of Sweden’s entry into PICASSO, Europe’s aFRR platform, in late 2027 or early 2028. This is great news for Battery Energy Storage System (BESS) projects, which have so far been locked out of this market. 

For years, the Swedish aFRR market was dominated almost exclusively by large hydro and wind units. Barriers to entry were high because SvK’s technical caps prevented new market participants from connecting directly via the mandatory real-time communication protocol, and because the Swedish aFRR market is purely a capacity market with pro-rata activation. 

In parallel, the influx of batteries into the frequency containment reserves (FCR) caused prices to fall as markets saturated. SvK’s intention to allow prequalified aFRR capacity before Sweden joins PICASSO therefore opens a new revenue stream.

Now, while the details still need to be determined, the aFRR requirements are unlikely to change, so the 60-minute endurance rule could still be a hurdle for batteries. Taking part in Swedish aFRR requires a direct real-time connection (ICCP) to SvK’s control systems, with telemetry refreshed every few seconds; that setup was designed for a small group of large hydro, wind and nuclear producers. While SvK allowed temporary derogations in other reserve markets, it kept the aFRR requirements as they were.

Jump to:

• What changes before and with PICASSO
• aFRR: an endurance challenge for BESS
  
• How to make it work in aFRR
  
  

What changes before and with PICASSO

SvK already allows aFRR delivery via a proxy, routing telemetry through another provider’s connection. At Balancing Day, SvK announced two options it has started to explore, with the intention to have them in place by the time Sweden enters PICASSO:

• A new communication protocol that balancing service providers (BSPs) may use for aFRR participation, although no further information has been communicated so far.

• A third-party ICCP connection that BSPs could use, and for which SvK has initiated a tender process. 

The market design is changing too. Today, Swedish aFRR is a capacity market with pro-rata activation, where every contracted unit ramps up or down together whenever frequency deviates. Once Sweden enters the PICASSO platform, this will change to an energy activation market based on merit-order bid pricing, matching the mFRR market structure. In this merit-order activation, separate energy bids (€/MWh) are submitted, and activations are cleared from cheapest to most expensive.

Here’s a side-by-side comparison of the two models and their impact on BESS: 

aFRR: an endurance challenge for BESS 

While the market design evolves in favour of BESS, the endurance requirements remain the same and could cause problems for existing assets. 

Because aFRR corrects longer imbalances, SvK requires providers to prove their ability to sustain full activation for 60 minutes in the contracted direction. So far, most Swedish batteries have been built for fast, short reserves and can last only 30 minutes to one hour at full power. 

Activations in aFRR are often prolonged and unidirectional: during extended activation events, short-duration BESS risk hitting their state-of-charge (SoC) limits and end up empty or full before the activation ends. As a result, this exposes them to non-delivery penalties and imbalance settlement costs. 

Finally, this endurance requirement will directly impact trading strategies. Every megawatt that a battery commits to aFRR cannot be used for FCR-D, FCR-N, or wholesale. Finding the sweet spot will require multi-market optimisation to decide how much capacity to allocate to aFRR, how to trade in the intraday market to keep the SoC on track during long activations, to ensure that no value is left on the table.

How to make it work in aFRR

aFRR is within reach for batteries: it just requires different management and trading strategies.

• De-rate and bid asymmetrically. Bid a 10 MW / 10 MWh battery well below its rated power so it can still hold a full hour after losses, SoC limits and earlier activations. Then, offer up- or down-regulation based on where its charge is expected to be at delivery.
• Optimise across markets and manage charge in intraday. At each auction, decide how much capacity goes to aFRR, FCR-D, FCR-N and wholesale, and price every aFRR bid at no less than what that capacity would earn elsewhere. Plan intraday trades ahead of delivery to bring SoC back on track during long activations, and build their cost into the aFRR bid.
  

Are you planning a large-scale battery project in Sweden? Reach out to discover how we can help accelerate your project's route to market and unlock long-term revenues.