April 26, 2012
Frequency regulation services, which balance the fluctuations between electricity generation and electrical load and manage the variability in the grid’s frequency output, have traditionally been tied to the wholesale energy market. Today, a second key driver has emerged: intermittent renewable energy. Solar PV, wind, and other intermittent resources are causing frequency instabilities on the electrical grid that require more extensive regulation capability across a wider swath of the grid. In addition, in the face of energy security concerns, major economies are mandating changes in energy mixes globally, altering the mix of technologies available to deliver frequency regulation. New opportunities in the frequency regulation sector are emerging in countries that are liberalizing or deregulating electricity markets, and additional opportunities are developing in fully deregulated markets that are changing market rules to differentiate the quality of frequency regulation delivered by various technologies. According to a new report from Pike Research, the amount of frequency regulation required globally is expected to increase over the next decade, thanks to increased volatility in both generation and load. The total value of the frequency regulation market will grow from $19.5 billion in 2012 to $27.2 billion in 2022, the cleantech market intelligence firm forecasts, with a compound annual growth rate of 3.5%.
Under a more aggressive scenario, revenue from frequency regulation services could reach $56.8 billion in 2022.
“The key factors that will influence the expansion of the frequency regulation market are the rate and robustness of economic recovery, the growth in intermittent renewable energy, and the liberalization of electricity markets,” says research analyst Anissa Dehamna. “The mix of technologies delivering these services will change the most in markets that are deregulated and, more specifically, in deregulated markets that differentiate the quality of frequency regulation services delivered.”
Whereas the cost of technology typically decreases over time, that is not the case for a service like frequency regulation. Indeed, with greater economic activity (and thus demand for energy), more and more diversity in generation assets globally, and increased market liberalization, the expectation is that the value of frequency regulation will increase over time. This means that on a per unit basis (per megawatt hour, in this case), Pike Research expects that a unit of frequency regulation will be worth more in 2022 than in 2012.
Pike Research’s report, “Frequency Regulation for the Grid”, analyzes the global market for frequency regulation including capacity supplied by coal power plants, natural gas power plants, nuclear power plants, and energy storage systems. The report provides a comprehensive assessment of the demand drivers, business models, policies, and technology issues associated with the frequency regulation market. Key industry players are profiled in depth and worldwide revenue and capacity forecasts, segmented by technology and region, extend through 2022. An Executive Summary of the report is available for free download on the firm’s website.
Contact: Richard Martin
+1 303 997 7609