Source: "Outlook for Ancillary Services 2024–2040", Energinet.

Denmark is in the midst of the greatest transformation of its energy system in modern times. In just a few years, the energy sector is moving from a centrally managed system with large power plants to a more dynamic and decentralized energy market driven by wind, solar, batteries, and intelligent energy management.

The green transition creates enormous opportunities — but also new challenges. When large parts of energy production come from renewable sources like wind and solar, electricity production becomes more variable. Solar panels produce the most in the middle of the day. Wind turbines only produce when the wind blows. At the same time, industry, transport, and heating are being electrified at high speed.

This means that the balance between production and consumption is becoming far more complex than before. Here, system services are becoming one of the most important building blocks of the future energy system. For companies and investors, this opens up a new market with long-term structural growth, attractive revenue opportunities, a critical infrastructure function, high demand for flexibility, and an increasing need for intelligent energy management.

According to Energinet, the need for central system services is expected to grow significantly towards 2030 — and even more towards 2040.

What are system services?

System services are the technical services that keep the power grid stable 24 hours a day. The entire electricity system is built around a stable frequency of 50 Hz. If production and consumption are not in balance, the frequency changes instantly — and even small deviations can create instability in the grid and, in the worst case, lead to extensive blackouts.

To ensure stable operation, Energinet buys various types of reserves and flexibility from the market. These reserves are activated automatically or manually to stabilize the grid during sudden changes in consumption, production fluctuations from wind and solar, faults in power plants or transmission grids, and large imbalances between regions or markets.

System services are provided by, among others, battery facilities, solar parks, wind turbines, industrial electricity consumers, electric boilers, data centers, and aggregator platforms. The market consists of, among other things, mFRR (manual balancing reserve), aFRR (automatic balancing reserve), FCR/FCR-D/FCR-N (frequency reserves), and FFR (Fast Frequency Reserve). All these products will be crucial in an energy system with a high share of renewable energy.

Why is the market growing so fast?

1. Traditional power plants are disappearing

Historically, large coal, gas, and combined heat and power plants have provided a large part of the stability that the power grid requires — rotation and inertia, frequency stability, reserve capacity, and voltage control. However, as fossil fuel power plants are phased out, a large part of this stability is disappearing, creating a growing need for new flexible resources. Energinet directly highlights that the future energy system will require far more market participants who can provide reserves and flexibility.

2. Electrification is accelerating

The industry, transport, and heating sectors are increasingly being electrified — among other things through Power-to-X, electric vehicles, large heat pumps, data centers, and green industrial production. This increases both the load on the grid and the need for dynamic regulation. At the same time, energy consumption is becoming more intelligent and flexible, which opens up entirely new earning opportunities.

3. More renewable energy creates more volatility

Wind and solar create large fluctuations in energy production. Some hours, enormous amounts of power are produced; other hours, production drops rapidly. This means more imbalances, larger price fluctuations, a greater need for rapid regulation, and a higher value of flexibility. The more unstable production becomes, the more important system services become.

Attractive revenues per MW

Figures from Energinet's annual statistics for 2024 show continued significant revenues in the market. Examples of annual payments per MW of capacity:

Product	Annual payment per MW
FCR-N (DK2)	approx. 3.1 million DKK
aFRR downward regulation (DK2)	approx. 2.2 million DKK
aFRR upward regulation (DK2)	approx. 1.8 million DKK
Countertrade	approx. 1.1 million DKK
mFRR month (DK2)	approx. 1.16 million DKK

Although prices vary from year to year, the market remains attractive for players with flexible capacity and intelligent control.

Batteries will be key winners

Batteries are particularly interesting in the system services market because they can react extremely quickly. While traditional plants often spend minutes regulating output, batteries can react in milliseconds or a few seconds. This makes them ideal for products such as FFR, FCR-D, FCR-N, and aFRR.

The fastest system services are also becoming increasingly important because the electricity system is losing natural inertia from traditional power plants — this gives batteries a unique competitive advantage. Therefore, the market is seeing massive growth within grid-scale battery parks, hybrid projects with solar and battery, virtual power plants (VPPs), AI-controlled energy platforms, and aggregator solutions.

From energy consumption to revenue source

One of the biggest changes in the energy market is that electricity consumption can now become an active source of income. Previously, energy consumption was primarily a cost — now companies can earn money by being flexible. This applies, for example, to companies that can shift energy consumption in time, temporarily reduce load, charge batteries intelligently, control cooling and heating dynamically, and regulate industrial processes.

Flexibility thus becomes an asset. Companies with intelligent energy management can both reduce their energy bill, generate new income via system services, strengthen their energy security, and improve their ESG profile.

Software becomes crucial

The energy market of the future will be largely software-driven. The most successful players will not necessarily be those with the largest facilities — but those with the best control, because the market is becoming more dynamic hour by hour.

Energinet is moving towards dynamic dimensioning of reserves, where the need changes continuously depending on weather conditions, grid load, import and export, production mix, and market balance. This creates more volatility, more trading opportunities, higher value of automation, and a greater need for AI and forecasting. Players with advanced EMS, SCADA, and trading platforms will therefore have a significant competitive advantage.

Aggregators and virtual power plants

Many companies do not have enough flexibility on their own to participate directly in the market. Here, aggregators become central — an aggregator brings together many smaller flexible units into one overall market player; this could be batteries, charging infrastructure, industrial consumption, cooling systems, solar installations, and heat pumps. Together, they function as a virtual power plant (VPP) that can provide system services to Energinet. This market is expected to grow significantly in the coming years.

Risks and challenges

The market is attractive — but not without risk.

Technical complexity

Facilities must be pre-qualified by Energinet and comply with extensive technical requirements. This often requires SCADA integration, fast response time, documented performance, communication infrastructure, and operational monitoring.

Price fluctuations

Prices can vary significantly from year to year. As more players enter the market, margins may be squeezed. Earnings therefore depend increasingly on technology, optimization, market strategy, and timing.

Regulation and market design

EU regulation and new market designs are constantly evolving. Product definitions, settlement models, and access requirements can change over time. Investors must therefore think long-term and choose solutions that can be adapted to future market changes.

Where do investors see the greatest opportunities?

Battery parks — fast response, high flexibility, and strong earning potential.

Hybrid projects — the combination of solar, battery, and intelligent control is becoming increasingly attractive.

Industrial flexibility — large companies can monetize their energy consumption.

Aggregator platforms — virtual power plants are expected to become a central part of the future energy system.

Energy software — AI-based optimization and trading platforms are becoming crucial for profitability.

Conclusion

System services are evolving rapidly from a niche area to a central investment segment in the green transition. Denmark will become one of Europe's most advanced markets for flexibility and intelligent energy management.

Energinet's forecasts clearly point to an increasing need for reserves, faster response times, more market participants, increased electrification, and more dynamic energy markets. For companies, this means new sources of income. For investors, it means access to a market driven by long-term structural growth, critical infrastructure value, the green transition, digitalization of the energy system, and an increasing need for flexibility.

The players that position themselves early with batteries, software, and intelligent energy management can become among the biggest winners in the future energy market.