When a company considers an industrial battery installation, the decision is rarely only about the battery itself. It is about the system the battery has to ...

When a company considers an industrial battery installation, the decision is rarely only about the battery itself. It is about the system the battery has to work with: the Danish electricity market, the grid, and the regulation that shapes both. For a CFO, a COO or an energy manager, it is hard to assess an installation without understanding the world it has to operate in.

This article is an overview. It explains the Danish electricity system in broad terms, how the markets fit together, why renewable energy, bottlenecks and flexibility are three sides of the same development, and what regulatory change means looking ahead to 2030. It also gathers the questions industrial decision-makers ask most often, and translates the system level into the concrete consequences for a business. Along the way we point to a set of deeper articles on the individual topics, so it is possible to go further where that is useful. The aim is not to turn the reader into an energy trader, but to provide the system overview needed to make an informed decision about an installation.

The Danish electricity system in five layers

The Danish electricity system has changed markedly in a few years. From a system carried by a handful of large, controllable power plants, it has become a system with a high share of wind and solar, closer coupling to neighbouring countries, and growing electricity demand. That change is the backdrop to almost everything a BESS decision-maker encounters: swinging prices, bottlenecks, new markets, and regulation that is continually adjusted. To place a battery in that picture, it helps to see the system as five layers that depend on one another.

The first layer is generation. Electricity is today produced largely from wind and solar, supplemented by combined heat and power, biomass and imports through the interconnectors. A rising share of generation is variable, meaning weather-dependent, and that fundamentally changes how the system has to be managed. Where it was once possible to turn a few large plants up and down, balance now has to be found in a system with many, more fluctuating sources.

The second layer is the grid. The transmission grid carries large volumes of electricity over long distances at high voltage and is operated by the system operator, Energinet (Denmark's national transmission system operator). The distribution grid carries electricity the last stretch out to businesses and households and is operated by local grid companies. The grid is the physical infrastructure, and as we return to later, it is increasingly where the constraints appear.

The third layer is balance. Generation and consumption must stay in balance from second to second, which is read directly from the grid frequency around 50 hertz. To hold that balance, Energinet buys a set of reserves, known as system services, that can respond to deviations at different speeds.

The fourth layer is the market. Electricity is traded on a common Nordic and European exchange, where the price is set hour by hour, and closer to the delivery hour positions are adjusted on the intraday market. The price reflects the balance between supply and demand and therefore swings with the weather, consumption and the capacity on the connections to neighbouring countries.

The fifth layer is consumption, including industry. This is where electricity is used, and where a battery can sit as a local component that can shift consumption in time, store energy and take part in the markets through the right counterparties.

The five layers are not separate. A change in generation feeds through into the market, the grid and the balance, and an installation at a consumer site can affect several layers at once. A battery that discharges in a peak hour affects the consumption layer, the market and, locally, the grid. That interconnection is what the rest of this article unfolds.

Why renewable energy, bottlenecks and flexibility belong together

One of the most important points in the modern electricity system is that more renewable energy does not by itself solve everything. It also creates new challenges that are tightly linked.

Solar and wind produce when the weather allows it, not when consumption is highest. In some periods they produce more than is used. In 2024, renewable sources covered a large share of Danish electricity consumption, and in a substantial share of the year's hours production from solar and wind exceeded total consumption, cf. Energinet's review of the year 2024. When there is a surplus, the price falls, and in periods all the way to zero or below.

The surplus must either be used, stored or transported away. If the grid cannot move it to where it is needed, a bottleneck forms, and part of the renewable production may be curtailed because it can neither be absorbed locally nor exported. That is an awkward situation: there is ample green electricity, but it cannot be used. Price differences between price areas are a market symptom of exactly that: the grid cannot freely move electricity to where it is cheapest, as described in Energinet's Electricity Market Report 2025.

This is where flexibility comes in. The ability to shift consumption and store energy makes it possible to use more of the renewable production and to relieve the grid locally. Renewable energy, bottlenecks and flexibility are, in other words, three sides of the same development: the more variable generation there is, the greater the need for flexibility and for a grid that can keep up. The more solar and wind that is added, the larger the price swings between surplus and deficit hours become, and the more valuable a tool that can move energy between them becomes.

It is also important to be precise about what a battery can do in that context. It can relieve a bottleneck locally and shift energy in time, but it does not add transfer capacity to the grid and does not solve the structural bottlenecks between regions. The large, systemic challenges are addressed through a combination of grid expansion, markets and flexibility across many actors. A battery is one piece that can contribute locally, and that is the role it should be assessed against. We go deeper on both bottlenecks and the market consequences of surplus in separate articles.

System services: how the grid buys speed and balance

To keep the frequency stable, Energinet buys reserves that can respond quickly. The fastest are called Frequency Containment Reserve. In western Denmark the product is called FCR, while eastern Denmark has FCR-N for the small, ongoing fluctuations and FCR-D for larger disturbances. According to Energinet's product overview, FCR responds within 30 seconds, while the related activation reserves aFRR and mFRR have response times of five and 12.5 minutes respectively. The fast reserves slow a frequency deviation, and the activation reserves then bring the balance fully back into place. The difference between the two FCR products in eastern Denmark is worth knowing: FCR-N works within the normal frequency band close to 50 hertz and adjusts the small, ongoing fluctuations, while FCR-D only comes in for larger, sudden disturbances, for example if a large plant or an interconnecting link trips out. As more generation comes from solar and wind, there is less natural inertia in the system, and that makes the fast reserves more in demand.

Batteries are technically well suited to the fast reserves, because they can go from idle to full power almost instantly and deliver a precise, repeatable response. But speed is not everything. A battery has a limited energy store and is therefore treated as a special category, where there are requirements for managing the state of charge so it can deliver the promised service without running empty. A unit must also be prequalified, meaning it must, through technical tests, document that it can deliver before it may take part. Most stand-alone industrial batteries are too small to participate alone and therefore enter an aggregated portfolio, which forms part of the rule set Energinet has for prequalification of units and aggregated portfolios.

A distinction is made between two forms of payment: capacity, meaning being available, and energy, meaning the service actually delivered when the reserve is activated. We cover FCR and the other fast reserves, as well as the activation markets aFRR and mFRR, in two separate articles. For this overview, the point is that system services are how the electricity system buys speed and balance, and that a battery can contribute if it meets the requirements.

The markets: where value arises

Alongside the system services sit the actual energy markets. The largest is the day-ahead market, often called the spot market, where electricity is traded the day before the delivery day, and where the price is set in a common European coupling, as Nord Pool describes. Closer to the delivery hour, positions can be adjusted on the intraday market when forecasts change. A battery can in principle create value across these markets by taking up energy when the price is low and delivering it when the price is high.

Beyond the energy markets there is payment for capacity, which is more closely tied to the rules for resource adequacy. The split between capacity and energy recurs across the markets: capacity is payment for being available over a period, while energy is payment for the volume actually delivered when the unit is activated. A unit can therefore in some markets receive payment for being ready, even in hours when it is not activated, and in addition for the energy it delivers when the call comes.

Over time a battery can combine several of these revenue streams, depending on where value is highest in a given period. That is one reason a battery is rarely optimised against a single market alone. We do not describe the concrete way a portfolio is optimised, because that is operational and commercial knowledge, and we deliberately state no price levels in this series, because they swing with hour, price area and season, and because historical levels are not a promise about the future.

One important separation is worth stressing already here. That there are revenue opportunities in the markets does not mean that a customer in our standard model is exposed to them. The customer receives a fixed payment, while market revenue and market risk sit with ZynexGroup during the agreement period. How a battery can be optimised across several markets is covered in a separate article on revenue streams. The central point for a decision-maker is to understand that value arises from flexible use of the same installation, not from one market alone.

Two electricity zones: DK1 and DK2

Denmark is divided into two price areas. DK1 is western Denmark, west of the Great Belt (Storebælt), and belongs to the Continental European synchronous area. DK2 is eastern Denmark, east of the Great Belt, and belongs to the Nordic synchronous area. The division is formally set out in Energinet's regulation on balance responsibility, and the two areas are connected only by a direct-current link across the Great Belt.

The division means that prices, system-service products and local conditions can vary between the two zones. Eastern Denmark is, according to Energinet's market report, generally more exposed to high prices in periods with low production from solar and wind, because western Denmark has more and larger interconnectors to draw on. Western Denmark is connected to, among others, Germany, Norway, Sweden, the Netherlands and the United Kingdom, while eastern Denmark is connected to Germany and Sweden. The different connections give the zones different exposure to the surrounding market.

The system services are also organised differently in the two zones, as described above. For a company with sites in both places, it is worth knowing that the assumptions cannot simply be transferred from one end of the country to the other, and that an installation should therefore be assessed location by location. Neither zone is generally better than the other, but they are not the same, and a business case that holds in one zone can look different in the other. We cover the practical differences in a separate article.

Grid and connection: a scarce resource

The grid has become one of the most decisive factors for whether a project can be realised. Demand to be connected to the electricity grid has grown sharply, and Energinet reported in early 2026 that around 60 gigawatts of new demand sat in the queue, while Denmark's maximum consumption is around 7 gigawatts. A large share of the pressure comes from data centres, batteries and power-to-X plants. That led Energinet to temporarily pause new connection agreements.

The pause was followed by a new model. Energinet announced in May 2026 that larger connections will, going forward, be handled together in batches and under tightened requirements for maturity, progress and grid-friendliness, and that for the very largest connections the time horizon can in several cases be five to ten years. At the same time, the system operator manages ongoing bottlenecks in operation through redispatch and countertrading.

For a company, the pressure does not show up as a blackout at the meter, but as limited access: longer waiting times and local capacity that cannot simply be expanded. That makes an existing, utilised grid connection more valuable, because it does not sit at the back of a multi-year queue, and it makes timing a real strategic question. A battery placed at an existing connection and configured so that it loads the grid as little as possible is exactly the kind of grid-friendly solution the new model rewards. We cover both bottlenecks and grid connection and waiting times in separate articles.

Regulatory momentum

The framework around the electricity market is changing on several fronts, and the direction is toward more flexibility and more storage.

At EU level, the electricity market was reformed in 2024 with Regulation (EU) 2024/1747 and an accompanying directive. The reform recognises flexible demand and storage, requires member states to assess their need for flexibility, promotes long-term contracts such as power purchase agreements and two-way contracts for difference, and frames capacity mechanisms that storage can take part in. The European Commission describes capacity mechanisms as a payment for having capacity available, which member states can introduce under specified conditions. In Denmark such a mechanism has not yet been introduced, but work is under way to clarify whether it is relevant. We go deeper on the reform in a separate article.

At Danish level, the projections show that the system is under pressure. Following a recommendation from Energinet, the Minister for Climate, Energy and Utilities has set the planning target for security of electricity supply for 2035 at 38 minutes of interruption, a modest increase from the previous target of 36 minutes for 2034. Denmark still has a very high level of security of electricity supply, but electrification and ageing grid components put pressure on that level. And in summer 2026 a broad political majority agreed an emergency plan for the electricity grid, which is to make it possible to prioritise access to the grid according to politically set criteria rather than first come, first served. The three tracks (reform, projections and prioritisation) point the same way: flexibility and storage become more in demand, and access to the grid becomes something that has to be earned rather than something that is granted automatically. We go deeper on the projections in a separate article.

The value chain and the actors

A battery does not enter the market on its own. There is a chain of roles between the installation and the market. The balance-responsible party carries the financial responsibility toward Energinet for imbalances between what was planned and what actually occurred. The balancing service provider delivers the system services themselves and can be a different actor from the balance-responsible party. The aggregator pools several installations in a portfolio so that together they can meet the market's size requirements, for example a minimum bid size that a single smaller unit cannot reach alone. Since 1 January 2025, aggregator companies have, under the executive order on aggregation, the right to participate in the electricity markets on non-discriminatory terms.

The point for an installation owner is that owning a battery does not in itself make one a market participant. An installation owner typically sells its electricity through a supplier that works with a balance-responsible party, and to bid into system services the installation must either work with a balance-responsible party or a balancing service provider, or itself be approved as one of those. Market access therefore sits in the market-facing roles, and those can be handled by a partner, so the customer does not itself have to contract with a balance-responsible party or prequalify the installation. Balance responsibility also carries financial risk from imbalances and market swings, and when that role sits with the partner rather than the customer, it is also the partner that carries that risk. We cover the full value chain in a separate article.

ZynexGroup's role in the market

Here it is appropriate to be precise about what we do. ZynexGroup helps industrial customers get BESS installations into operation and participate in the Danish electricity market through optimisation and cooperation with an aggregation partner. The customer receives a fixed contractual availability payment, while ZynexGroup handles the commercial optimisation during the agreement period. ZynexGroup is not a balance-responsible party and does not promise the customer a specific market return, but ensures that the installation can enter relevant markets when that is technically and contractually possible.

Concretely, our focus today is on the activation markets aFRR and mFRR through our partner. We do not actively participate in FCR today, because under current conditions it is not the most commercially attractive for our model. We also handle screening and support in the grid-connection process, and our platform can help smaller sites that would otherwise fall below typical partner requirements to enter the partner network. All of this happens within one framework: the customer contracts with us, and we and our partner handle the market-facing roles. The customer is thereby relieved of both the administrative work and the exposure to market swings.

From system level to business consequence

This whole review can be boiled down to a few consequences for a company. First, electricity is no longer an unlimited, price-stable resource that can be taken for granted. The price swings more, and access to the grid has become scarce. That makes it more valuable to be able to shift and store energy, and it makes timing and existing grid access real assets.

Second, there is a difference between the complexity of the system and the customer's position. The system is complex, with many markets, roles and rules. But for a customer in our standard model the position is simple: a fixed availability payment and a clear division of work. It is not necessary to understand every detail of the markets to make a sound decision, but it helps to understand what a battery can contribute, and what it cannot.

Third, a battery is a piece, not a universal solution. It can relieve locally, shift energy in time and enter the markets through the right counterparties, but it does not change the national statistics for security of supply, does not add grid capacity and does not solve the system's overall challenges alone. A responsible decision therefore rests on a concrete assessment of the individual site, not on a general expectation that the market or the system will deliver a gain.

Fourth, the direction of the system is clear, even though the details are uncertain. More renewable energy, larger price swings, scarcer grid capacity and regulation that prioritises flexibility all point the same way: the ability to shift and store energy becomes more valuable over time, not less. That does not mean an installation is a good idea for everyone, but it does mean that the question of flexibility and storage is worth addressing actively rather than postponing it until the system forces a decision. A sober assessment now is better than a rushed decision later.

Frequently asked questions

Do I as a customer earn from the spot market? In our standard model, no. The customer receives a fixed contractual availability payment and is not directly exposed to the spot price or to revenue from system services. Any market revenue the optimisation may generate accrues to ZynexGroup during the agreement period, in return for the customer receiving a predictable payment.

Who trades on the market on the installation's behalf? That is done by our partner in the market-facing roles, not by the customer and not by ZynexGroup as balance-responsible party. The customer does not trade itself and is not a market participant in a legal sense. It is a deliberate division of work, where market access is facilitated through the value chain.

Why a fixed payment rather than a share of market revenue? Because it gives the customer predictability and moves market risk away from the customer. Markets swing, and optimisation requires ongoing work and exposure. In the standard model ZynexGroup carries that risk and that work, while the customer receives an agreed payment. The payment model itself, including the calculation basis, belongs to our financial pillar, where it is described in detail.

Does ZynexGroup participate in all markets? No. Our current focus is aFRR and mFRR via a partner, while FCR is not a market we actively participate in today. Which markets a concrete installation can enter depends on the installation, the site and the applicable rules, and that forms part of the assessment we make together with the customer.

The deeper articles, and when to go further

This article is an overview. The articles below go deeper into each topic. They can be read separately, depending on what is relevant.

FCR, FCR-D and FCR-N: What are system services, and why does anyone pay for your battery's speed?: What system services are, and what batteries are paid for. Relevant as a foundation for the market.
aFRR and mFRR: Activation markets explained for industry: aFRR and mFRR explained for industry. Relevant when activation markets need to be understood.
Spot, intraday and capacity markets: Where does a BESS actually earn money?: Where a BESS earns money across markets. Relevant for aligning expectations.
Grid congestion and redispatch: What happens when the grid is full?: Bottlenecks and redispatch in practice. Relevant for renewables-heavy sites and grid pressure.
The electricity market reform 2024: Capacity markets and what they change for batteries: The electricity market reform and capacity markets. Relevant for strategic timing.
Energinet's projections: What the figures mean for industry's electricity supply: Energinet's projections and consequences. Relevant looking ahead to 2030.
DK1 vs DK2: Practical differences for industrial BESS installations: Practical differences between DK1 and DK2. Relevant when choosing location.
BRP, aggregator and balance responsibility: Who does what in the value chain?: The value chain from installation to market. Relevant when roles need to be clarified.
Grid connection, waiting times and strategic timing: Why timing is a market question: Grid connection, waiting times and timing. Relevant before investment.
When solar and wind produce without storage: Market and grid consequences for industrial consumers: Surplus electricity and market consequences. Relevant for renewables and flexibility.

Overall perspective

The Danish electricity system can be understood as five layers: generation, grid, balance, market and consumption. They are linked, and the major change (more renewable energy) feeds through all of them. That creates surplus and bottlenecks, and it makes flexibility and storage more valuable. At the same time the grid has become a scarce resource, and regulation is moving toward prioritising access and supporting flexibility.

For an industrial decision-maker, the most important point is that the market is complex, but that the customer's position in our standard model is simple: a fixed availability payment and a clear division of work, where ZynexGroup and a partner handle the market. Understanding the system makes it easier to assess what an installation can realistically contribute, and to distinguish what is real from what is too good to be true. The deeper articles in this pillar go into each of the topics this overview has touched, from system services and markets to grid, regulation and value chain.

Have the potential for your facility assessed

If you want a concrete picture of what an industrial BESS installation can mean for your business in the Danish energy market, we start from your own data: grid connection, consumption profile and history, preferably supplemented with your knowledge of critical loads and operating conditions. On that basis we produce an initial assessment of whether there is a match, and what the next step could then be. You are welcome to contact us.

The Danish energy market explained: What industrial BESS decision-makers need to understand in 2025-2030