Ancillary Services Transition

The generators that historically provided ancillary services are the same ones being retired for climate reasons. The replacements do not offer the same services for free.

Coal and gas plants inherently provide inertia, frequency response, and voltage support as byproducts of spinning a massive turbine connected to the grid. When those plants retire and are replaced by inverter-based resources (solar, wind, batteries), these services do not come automatically. They must be explicitly procured and paid for. Batteries can provide fast frequency response and spinning reserves, often faster than turbines. But they cannot provide inertia (they have no spinning mass) or black start capability without additional engineering. Synthetic inertia from inverter controls is possible but requires grid code mandates that most US markets have not yet adopted.

Repricing what was free. PJM's frequency regulation market has paid out on the order of $200 million a year. As retirements accelerate, grid operators expect procurement costs for frequency response and voltage support to keep climbing through 2030.

If batteries respond faster than gas turbines, why do ancillary service costs go up rather than down?

Volume, not speed. Batteries are fast but energy-limited. A gas turbine can provide reserves for hours; a 4-hour battery depletes. Replacing one gas plant's ancillary service portfolio requires multiple battery installations plus new grid code requirements for synthetic inertia, adding costs that did not exist when the services were embedded in the generation fleet.

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