A frequency response optimization system includes a battery configured to store and discharge electric power, a power inverter configured to control an amount of the electric power stored or discharged from the battery, a high level controller, and a low level controller. The high level controller is configured to receive a regulation signal from an incentive provider, determine statistics of the regulation signal, and use the statistics of the regulation signal to generate an optimal frequency response midpoint. The optimal midpoint achieves a desired change in the state-of-charge of the battery while participating in a frequency response program. The low level controller is configured to use the midpoints to determine optimal battery power setpoints for the power inverter. The power inverter is configured to use the optimal battery power setpoints to control an amount of the electric power stored or discharged from the battery.