Mitigating the decline of FCAS prices
Frequency Control Ancillary Services (FCAS) has provided a lucrative revenue stream for many I&C energy users; however, recently, FCAS prices have seen a significant decline.
In its latest white paper, ‘Understanding the decline in FCAS prices’, energy technology company GridBeyond explored the reasons why FCAS prices have fallen and what businesses can do to recoup lost revenues.
According to the latest Quarterly Energy Dynamics report (covering Q1 2025), published by AEMO, total FCAS costs reached $13m in Q1 2025, representing approximately 0.3% of the total cost of consumed energy for the quarter. This marks a $16m decrease compared to the same period last year.
This reduction was said to be mainly driven by lower FCAS prices and a smaller number of volatility events during the quarter, relative to last year. In the same time period, BESS output increased by 86% year-on-year in the NEM, reaching an average of 98 MW.
The significant decline in FCAS prices is said to reflect the impact of increased battery storage capacity and evolving market dynamics. But although FCAS prices are decreasing, it is said that energy prices will stay high, providing an opportunity for businesses to recoup lost revenues, with the right technology.
The report states that while falling FCAS prices present a challenge, they also mark a shift in how value is created in the evolving energy ecosystem. There are still strategic pathways for I&C businesses to recoup lost revenue. The key for I&C businesses is to shift from passive participation in legacy markets to proactively stacking value through energy flexibility like demand side response, process optimisation and energy storage. Businesses that embrace this change can recoup lost value and capture even greater returns in the long run.
The report concludes that demand side response and process optimisation can allow businesses to identify real flexibility opportunities; enable more informed decision-making in optimising energy; and create a more efficient and cost-effective energy strategy.
Read the full white paper here.
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