CO₂ displacement explained: What it means when a battery shifts green electricity

When batteries and sustainability are discussed, one formulation often appears: that a battery "shifts green electricity" and thereby displaces CO₂. The image is intuitive. The battery stores electricity when the sun is shining and the wind is blowing, and releases it later when demand is there. But from that image to a concrete claim about how many emissions have been avoided, there is a large gap. And that is precisely where many green claims go wrong.

This article explains what CO₂ displacement means in a battery context, why the difference between average and marginal grid mix is decisive, and what must be documented before a displacement can be claimed. We do this deliberately without concrete figures, because credible emissions calculations require a documented method, and because we at ZynexGroup do not deliver such a CO₂ displacement tool today. The purpose is to give an honest foundation so that a battery investment can be described correctly, without promising more than can be documented.

What “shifting green electricity” means

A battery does not change how much electricity a business uses. It changes when electricity is drawn from or delivered to the grid. The physical electricity on the grid is a mixed product at that moment. Regardless of which electricity contract you have, the power at the socket comes from the whole production mix at that moment.

That distinction is worth keeping in mind, because "green electricity" in marketing most often refers to guarantees of origin, not physical delivery. A guarantee of origin is an electronic certificate for 1 MWh of renewable energy, traded separately from the physical electricity under a method called book and claim. The certificate documents the origin of an energy consumption, even though there is no direct link between the produced unit and the guarantee. A guarantee of origin therefore says something about the accounting, not about which electrons flowed when. Energinet is Denmark's national transmission system operator.

A displacement claim is a different kind of claim. It is not about what a certificate covers, but about an actual change in the system's total emissions: what would have happened without the battery, and what happens with the battery. That is the difference a displacement must measure, and it is harder to establish than the image of shifted green electricity suggests.

Average and marginal grid mix

To understand why, it is necessary to distinguish between two ways of putting a number on the CO₂ content of electricity.

Average emissions factor: This is an average of the emissions from the whole electricity mix. In Denmark, the Danish Energy Agency (Energistyrelsen) and Energinet publish an emissions factor for Danish electricity consumption based on an hourly model, split between western and eastern Denmark (the price areas DK1 and DK2). The factor describes how much greenhouse gas is on average associated with consuming one kilowatt-hour from the grid. It rests on a series of boundaries, for example that emissions from extraction and transport of fuels as well as biogenic emissions are not included, and according to the authority itself the figure carries considerable uncertainty. The average factor is suitable for accounting for existing consumption, including in corporate reporting.

Marginal emissions factor: This is something else. The marginal factor describes how the system's total emissions change when consumption rises or falls a little at a given time and place. In other words: which production is turned up or down when you draw an extra kilowatt-hour or refrain from doing so. It is rarely the average that responds. It is the plant on the margin that has the next available capacity, often a fossil plant in hours with low wind and sun, and often renewable energy in hours with surplus.

This distinction is not academic pedantry. The scientific literature consistently points to the marginal rather than the average factor as the right metric when assessing the effect of shifting consumption, placing new load or adding renewable energy. If you use an average to describe a change, you can end up grossly misjudging the actual displacement.

Why it is the marginal electricity that determines the displacement

A battery charges and discharges, and along the way there are losses. The electricity charged in is always greater than what comes out again. This round-trip efficiency has a direct consequence for CO₂ accounting. Emissions linked to a battery's operation can be stated as the sum of emissions at charging times minus the emissions at discharging times. A battery only reduces CO₂ when the difference between the two exceeds the emissions that the loss itself costs.

That leads to a point that is central to any honest displacement claim: a battery does not automatically reduce emissions. Peer-reviewed research shows that the loss itself increases the carbon intensity of all electricity that runs through the storage, and that pure price arbitrage in some cases can increase total emissions, even if efficiency were perfect. The effect depends entirely on the marginal factors when the battery charges and when it discharges. If the battery charges in hours when otherwise surplus solar and wind would have been turned down, and discharges when the alternative is fossil production, the effect is favourable. If the battery is instead used in a way that does not reduce waste of renewable energy, the result can be the opposite.

The same picture appears in practical assessments of battery operation. An analysis notes that building battery capacity does not in itself reduce the power sector's emissions, and that a battery can cause additional emissions if it is driven purely commercially or controlled by an average reporting figure rather than by the actual marginal effect. The conclusion is not that batteries are bad for the climate. The conclusion is that the effect must be measured on what actually happens on the margin, and not assumed.

Three scenarios, explained carefully

With that distinction in place, the typical scenarios become easier to understand.

• Solar surplus: When solar parks produce a lot in the middle of the day, supply can exceed demand. Solar and wind now make up around two thirds of Danish electricity production, and a record number of hours with negative prices put particular pressure on solar parks. If a battery charges in such hours and discharges later, it can contribute to less green electricity going to waste. Whether that yields a CO₂ displacement depends on what the discharge replaces.

• Wind curtailment: The same applies to wind. In hours with strong wind and low demand, production can be turned down. The IEA describes how periods of overproduction are a growing challenge in systems with a lot of solar and wind, and how batteries can shift renewable production to hours with higher demand. Reducing this curtailment is, according to the research, typically where the gain is largest.

• Peak shaving and emissions: Peak shaving, where the battery covers the facility's peak load, is primarily about power and the electricity bill. The environmental effect is not given in advance. If the battery discharges in a peak hour where the marginal production is fossil, there can be a gain. But if the battery was simply charged at a time with equal or higher marginal emissions, the picture is muddy. Peak shaving is therefore an economic and operational discipline first, and any climate effect must be assessed separately.

Common to all three is that the potential is real, but conditional. Battery storage provides flexibility that can shift consumption and production in time, and can contribute to better utilisation of renewable energy and support the electricity grid. But an installation does not in itself make a company CO₂-neutral, and a displacement cannot be read directly from the fact that the battery is running.

What must be documented to claim a displacement

If a displacement is to be described as an actual effect and not merely an intention, some elements must as a minimum be in place.

• Method: There must be a described, recognised calculation method behind it. If a marginal approach is chosen, it must be clear how the marginal factors are determined, and why they are relevant for that specific installation.

• Scope: It must be clear what is counted. A Scope 2 inventory can be made with a location-based method (the grid average) and a market-based method (contractual instruments such as certificates), where the latter must meet set quality criteria. Neither of the two is in itself a marginal displacement calculation, and they answer different questions.

• Baseline and counterfactual: There must be a basis for comparison. What would have happened without the installation. Without a counterfactual situation, there is nothing to displace relative to.

• Time resolution: Because the electricity mix changes hour by hour, a meaningful assessment requires time-resolved data. An annual average view does not capture what a battery whose purpose is to shift energy between hours actually does.

• Source: The underlying data must come from a documentable source, so the figure can be verified.

These requirements are not only good practice. They reflect the legal framework for green claims. The Danish Consumer Ombudsman (Forbrugerombudsmanden) requires that environmental statements can be documented, including under the Marketing Practices Act's provisions on misleading claims and documentation, and general statements as a starting point require a life cycle assessment and independent specialist documentation. At EU level the direction is the same, where new rules require that green claims be supported by robust, scientifically grounded and verifiable methods. We cover the pitfalls further in our article on greenwashing and energy storage.

ZynexGroup's approach to system assessment

Our role is bounded and should be described as such. We deliver hardware, commercial optimisation of the system's flexibility and access to operational data. We are not ESG advisers or auditors, and we do not produce sustainability reports for the customer.

Concretely, our platform can make generic operational data available: energy consumption and energy throughput in kilowatt-hours, charge and discharge cycles, State of Charge (the battery's state of charge), availability and uptime, as well as overall market activity and flexibility. These are operational and monitoring data that the customer and the customer's own advisers can use in their own documentation. Which data points are involved is covered further in the article on ESG reporting and BESS.

By contrast, we do not deliver a concrete CO₂ displacement tool that compares consumption and dispatch with a counterfactual grid mix. Such a tool is not available from us today, and we will not put forward a figure that we cannot stand behind methodologically. If a company wants to assess a displacement, that exercise belongs with the customer's own ESG or climate adviser, who can choose and defend a method, possibly with operational data from the system as input.

We offer a 6-year payback guarantee on BESS systems. It concerns the economics and says nothing about climate effect, and the two questions should be kept separate.

Overall perspective

CO₂ displacement is a real phenomenon, but it is not an automatic consequence of a battery shifting energy. The effect is determined by what is charged and discharged when, by the loss along the way, and by which production actually responds on the margin. That is why it is the marginal grid mix and not the average that determines the actual displacement, and why a claim requires a method, a scope, a baseline, time-resolved data and a source.

For a business, the useful conclusion is sober. An industrial BESS system can support the electricity grid and better utilisation of renewable energy, and it can form part of an energy strategy. But it does not in itself make the company CO₂-neutral, and a displacement must be documented, not assumed. The honest position is to keep what can be measured in operations separate from the climate claims that require an independent method and an external specialist assessment.

Have the potential for your facility assessed

If you want clarity on what a battery can realistically contribute at your site, we are happy to have a data-based conversation. We start from your own data: grid connection, consumption profile and history. On that basis we make an initial assessment of whether a battery is a fit for the site, and we are clear that an actual CO₂ displacement calculation is a task for your own climate or ESG adviser, not for us. You are welcome to contact us.