Most NZ battery buyers calculate payback against one revenue stream — arbitrage on time-of-use tariffs. But batteries above a certain scale can sell up to four entirely separate services back to the grid, each with its own market, its own clearing mechanism, and its own price. Since 7 August 2025, when the Electricity Authority’s amended procurement plan came into force, the door to these markets has opened wider than ever. Here is what they are and what each one pays.

If you are scoping a battery energy storage system for commercial, industrial, or utility-scale use in NZ, understanding ancillary services is the difference between a single-revenue project and a stacked-revenue one. The four services below are run by Transpower as System Operator and overseen by the Electricity Authority. Each pays differently, each has different technical requirements, and the August 2025 reforms now let batteries participate in all of them.

Step 01: Fast Instantaneous Reserve (FIR)

The fastest, most battery-friendly service in the New Zealand market. FIR is the response that stops a frequency drop in its tracks when something big goes wrong on the grid.

• What it does: when a large generator or HVDC pole trips, system frequency falls below 50 Hz. FIR providers inject power within 6 seconds and sustain it for at least 60 seconds to arrest the fall.
• Why batteries dominate this market: sub-second inverter response times make batteries faster and more reliable than any thermal plant or even most hydro. Genesis Energy’s Rotohiko BESS and Meridian’s Ruakākā BESS have established strong North Island FIR positions.
• How it is priced: reserves are priced in $/MW for the MW availability you commit to keeping on standby, cleared every half-hour through the spot market alongside energy.
• Honest revenue reality: the FIR market is small in absolute terms. Concept Consulting’s January 2026 battery report confirms two existing BESS units already hold strong North Island positions, leaving less room for new entrants at attractive prices.
• Battery design implication: FIR favours batteries that can fully respond from any state of charge — easier for vanadium flow (100% depth of discharge) than for lithium that must stay within 20–80% to protect cycle life.

Step 02:Sustained Instantaneous Reserve (SIR)

Where FIR catches the frequency drop, SIR holds it up. Together they are the two arms of what New Zealand calls instantaneous reserve.

• What it does: SIR providers inject power within 60 seconds of an event and sustain it for at least 15 minutes, restoring frequency to 49.25 Hz or above.
• Why duration matters here: the 15-minute requirement separates SIR from FIR. A battery providing SIR has to be sized for that duration of full discharge, not a 60-second burst.
• How it is priced: priced in $/MW for committed standby capacity, cleared every half-hour. SIR generally pays less per MW than FIR but is procured in larger volumes.
• Stacking with FIR: a single battery can often provide both FIR and SIR simultaneously if it has the speed for one and the duration for the other — one of the practical stacking opportunities the August 2025 reforms made cleaner.
• The contingency context: SIR is procured to handle the largest credible loss of supply on the system — typically the loss of an HVDC pole between islands.

Step 03: Frequency Keeping (FK)

The quiet, continuous service that nobody outside the industry talks about. While FIR and SIR catch dramatic events, FK handles the constant small mismatches between supply and demand that happen every second.

• What it does: the system operator selects one or more generators every half hour to be “frequency keepers” in each island. These units adjust their output continuously to keep system frequency at 50 Hz, working second by second to match supply with shifting demand.
• The market structure: generators offer their willingness to supply frequency keeping into the wholesale market, and the frequency keeping selection tool dispatches them ahead of energy and reserves.
• Why this opens for batteries in 2025–2026: historically the province of large hydro. The EA’s August 2025 procurement reforms specifically clarified storage classification during charge and discharge cycles to improve market signals for batteries entering this service.
• The technical bar is high: FK requires continuous accurate response to small frequency deviations. Batteries that succeed here typically have grid-forming inverter capability and sophisticated SCADA integration.
• Honest revenue note: FK pays steadily but modestly. Its value is reliability of revenue, not size of revenue.

Step 04:Voltage Support and Black Start

The fourth and fifth services in the ancillary stack — grouped here because both are more specialised, both pay differently, and both are increasingly relevant to grid-forming battery installations.

• Voltage support: the grid needs reactive power injected or absorbed at specific locations to keep voltage within acceptable limits. Batteries with appropriately specified PCS (power conversion systems) can provide this. Payment is typically through long-term Transpower ancillary services contracts rather than half-hourly markets.
• Black start: the ability to start the grid back up from a complete blackout, without external power. Black-start providers are paid an annual availability fee. Historically the role of large hydro, but grid-forming batteries can now provide it for specific network sections — see our grid-forming page.
• Why both matter for big projects: smaller in volume than FIR or SIR, but multi-year and revenue-certain in ways the half-hourly markets are not.
• The procurement reform context: the EA’s BESS roadmap and the MBIE Electricity Market Performance Review are both actively examining how these services should be tendered as more inverter-based resources enter the market.
• Battery design implication: only grid-forming inverter installations can provide voltage support and black start credibly. Grid-following systems cannot.

The honest revenue reality for NZ battery owners

It would be misleading to suggest grid services will dominate the economics of a NZ battery installation. Concept Consulting’s January 2026 analysis confirms what most professionals already understand — the reserves market and ancillary services are very small compared to the wholesale energy market. For most batteries above 1 MW, arbitrage and peak shaving still drive the lion’s share of revenue.

What grid services do is improve revenue stacking. A battery earning from arbitrage AND FIR AND SIR AND frequency keeping AND peak shaving has four or five overlapping income streams instead of one. The compounding effect across a 25-year asset life is meaningful — particularly for vanadium flow installations whose cycle life supports continuous market participation without the cell degradation lithium shows under heavy cycling.

Conclusion

NZ’s ancillary services market is finally opening properly to battery participation. The EA’s August 2025 procurement reforms, the steady arrival of grid-scale BESS units, and the active market performance review all point toward a regulatory environment where revenue stacking becomes a real strategy. The four services — FIR, SIR, frequency keeping, and voltage support / black start — each have their own technical bar and pricing logic. None will dominate a battery’s economics on its own. Together, they can move project payback meaningfully forward.

For a tailored revenue stacking analysis built around a specific NZ project — including current FIR and SIR market data and grid-forming requirements — the Zion Technologies team can put together a written brief within 48 hours.