Balancing services market is changing as ČEPS auctions show rise of aggregators and pressure on flexibility prices

The results of ČEPS's long-term auctions for balancing services (SVR) for the second half of 2026 confirm that the Czech flexibility market is entering a new phase. The issue is no longer merely how much balancing capacity traditional large-scale assets can provide, but increasingly also how quickly aggregators, battery storage, cogeneration units and demand response are gaining ground in the system.

Balancing services are used to maintain the balance between electricity generation and consumption in real time. ČEPS procures both upward and downward services. An upward service, such as aFRR+ or mFRR+, means the ability to increase generation or reduce consumption. A downward service, such as aFRR− or mFRR−, conversely represents the ability to reduce generation or increase consumption.

aFRR stands for automatic frequency restoration reserve, while mFRR is manual frequency restoration reserve. On its website, ČEPS publishes annual statistics on provider shares in individual balancing services as well as overviews of weighted average ancillary-service prices.

Ancillary service prices falling sharply

The new data show a significant price shift. The average price of an aFRR+ long-term contract reached 20,8 EUR/MW/h in 2025, while the average aFRR+ day-ahead market price was 16,3 EUR/MW/h. For 2026, however, the average aFRR+ long-term contract price fell to 10,8 EUR/MW/h, nearly halving year on year. The difference between the individual half-years is substantial: in the first half of 2026, the average price was 14,6 EUR/MW/h, while in the second half it was only 7,0 EUR/MW/h.

The average aFRR+ day-ahead market price stood at 6,9 EUR/MW/h through the end of May 2026. Results for the first months of 2026 suggest that the day-ahead market and long-term contracts have converged in price for aFRR+, reducing the premium for the certainty of long-term coverage. For upward services, auction prices for the second half of 2026 were around 7 EUR/MW/h for aFRR+, mFRR5 and mFRR12.5.

A visible example is Nano Energies, which, according to its own assessment, secured 12 % of the total volume in the long-term auctions, placing the company third among balancing service providers in the Czech Republic and first among aggregators. The company says that, in combination with day-ahead auctions, it now provides more than 280 MW of flexibility for ČEPS. The most successful companies among providers include ČEZ a.s., followed by Teplárna Kladno s. r. o. and EIFlexi s. r. o.

The market is gradually changing

The results of ČEPS's long-term auctions for the second half of 2026 brought another important development: according to available market interpretations, ČEPS did not procure any capacity in aFRR− or mFRR− products and will rely exclusively on the day-ahead market for these downward services. This could be an important signal for further developments. In a system with a growing share of renewable energy sources, greater generation variability and more frequent situations of electricity surplus, downward flexibility may have high value, but its price will increasingly be set in the short term according to the current operating situation.

The key question, therefore, is whether certainty under a long-term contract or a bet on the day-ahead market will be more advantageous for flexibility providers. A long-term contract provides a more predictable capacity payment, but at current price levels it also limits the ability to deploy the given asset in other markets. The day-ahead market may deliver higher returns during periods of tight system balance or increased balancing needs, but it also entails greater price risk.