Reducing Peak Demand Charges

Reducing Peak Demand Charges

Unless you have rooftop solar, you’re probably incredibly unhappy about rising electric bills. This misery is even worse for commercial customers since — in addition to energy charges (billed on a kilowatt-hour basis) — they also pay for peak demand charges (billed on the maximum kilowatt demand each month).

For example, let’s say your business uses industrial equipment and a variety of office equipment. Your company uses 50,000 kwh of energy per month; at a rate of $0.15/kwh, your electric bill is $7,500 per month. In addition, your peak demand may be 300 kilowatts in a typical month; at a peak demand rate of $20 per kilowatt, you also pay $6,000 in demand charges every month.

As a conscientious and generous employer, you decide to install 20 EV chargers in your parking lot so your employees can charge up their cars while at work. Each employee may charge up their car with about 10 kwh per day — or $1.50 worth of electricity each, or $600 for all employees each month. A nice employee perk, and not too expensive. However, since 20 employees plug in their cars at about the same time every morning, and each charger draws about 5kw, your extra electricity peak demand will be 100 kw, or an extra $2,000 per month. Ouch!

So for many commercial customers, peak demand charges are a bigger cost than energy charges. Ordinary rooftop solar systems may not have a big impact on demand charges. However, batteries or special control systems in conjunction with rooftop solar can significantly reduce these demand charges.

To learn how your company can reduce peak demand charges, listen to this week’s Energy Show as we speak with John Powers with Extensible Energy. Extensible Energy has software that helps commercial solar buildings to use electricity intelligently and reduce peak demand charges.