Revenue stack and the energy market
Concepts describing revenue sources, market mechanisms and commercial models used by energy storage projects.
aFRR
aFRR, or automatic Frequency Restoration Reserve, is a balancing service activated automatically to restore system frequency.
Arbitrage
Arbitrage is the use of price differences over time by charging an energy storage asset when prices are lower and discharging it when prices are higher.
Curtailment
Curtailment means the reduction or limitation of energy generation or export despite the technical ability to produce or deliver energy.
FCR
FCR, or Frequency Containment Reserve, is a service used to stabilise system frequency immediately after a disturbance.
Floor
A floor is a contractual mechanism that sets a minimum revenue or price level for a project.
mFRR
mFRR, or manual Frequency Restoration Reserve, is a manually activated balancing reserve used to restore system balance.
PPA
A PPA, or Power Purchase Agreement, is a contract for the sale of electricity between a generator and an offtaker.
Revenue stack
Revenue stack is the set of revenue sources available to a project, including energy markets, balancing services, capacity payments and contracts.
Capacity Market
The Capacity Market is a mechanism that remunerates availability of capacity rather than only energy generated.
Tolling
Tolling is a contractual model in which one party pays for the right to use an asset's capacity or flexibility.
Ancillary services
Ancillary services are services provided to the power system to support its stability, reliability and balancing.