Peak Demand Management for Business Owners
Your demand charges can represent 30-70% of your commercial electric bill. Learn practical strategies to reduce your peak and keep more money in your business.
Understanding Your Peak
Before you can reduce your peak demand, you need to understand when and why it occurs. Most utilities measure demand in 15-minute intervals and charge based on your single highest interval each month.
Common Peak Demand Causes
Request 15-minute interval data from your utility. This shows exactly when your peaks occur and helps identify which equipment is responsible.
Load Shifting
Move flexible operations to off-peak hours. This doesn't reduce total energy use but spreads it out to avoid demand spikes.
Good Candidates for Shifting
- Electric vehicle charging
- Water heating and ice making
- Battery charging operations
- Non-critical pumping
- Pre-cooling buildings overnight
Implementation Steps
- 1 Identify flexible loads
- 2 Analyze peak timing from data
- 3 Install programmable timers
- 4 Train staff on new schedules
- 5 Monitor results monthly
Staggered Equipment Startup
Starting all equipment at once creates a massive demand spike. Staggering startup by just a few minutes can dramatically reduce your peak.
Example: Manufacturing Facility
HVAC Optimization
HVAC systems are often the largest demand driver. Smart management can cut demand 20-40%.
Cool the building during off-peak hours (early morning) and coast through peak periods with slightly higher setpoints.
Install controls that temporarily reduce HVAC load when approaching demand threshold.
Variable frequency drives reduce motor speed when full power isn't needed, cutting demand significantly.
High-Impact Equipment Upgrades
Some equipment upgrades pay for themselves quickly through demand savings.
| Upgrade | Demand Reduction | Payback Period |
|---|---|---|
| LED Lighting Conversion | 40-60% | 2-4 years |
| High-Efficiency HVAC | 20-35% | 3-7 years |
| VFDs on Motors | 15-30% | 2-5 years |
| Efficient Compressors | 20-40% | 3-6 years |
| Power Factor Correction | 5-15% | 1-3 years |
Battery Energy Storage
Battery systems can eliminate demand spikes entirely by discharging during peak periods.
How It Works
- 1 Battery charges during off-peak (overnight)
- 2 System monitors real-time demand
- 3 Battery discharges when approaching threshold
- 4 Grid demand stays below your target peak
Best For Businesses With
- Demand charges over $15/kW
- Predictable peak timing
- Short duration peaks (1-4 hours)
- Space for battery installation
Federal tax credits (30% ITC) and state rebates can significantly reduce battery system costs. Check with your utility for demand response incentives.
Quick Wins: No-Cost Demand Reduction
Frequently Asked Questions
What is peak demand and why does it matter?
Peak demand is the highest amount of electricity your business uses at any single point during a billing period. It matters because utilities charge demand fees based on this peak, which can represent 30-70% of your commercial electric bill. Reducing your peak by even 10-15% can result in significant monthly savings.
What time of day does peak demand typically occur?
For most businesses, peak demand occurs during mid-afternoon hours (2-6 PM) on hot summer days when HVAC systems work hardest. However, manufacturing facilities may peak during production startups in the morning. Understanding your specific peak timing is crucial for effective demand management.
How much can I save by reducing peak demand?
Savings vary by utility and rate structure, but reducing peak demand by 100 kW at $15/kW demand rate saves $1,500 per month or $18,000 annually. Some businesses achieve 15-30% demand reduction through load management, translating to thousands of dollars in annual savings.
What equipment should I upgrade first to reduce demand?
HVAC systems typically offer the biggest demand reduction opportunity since they're often the largest electrical load. Variable frequency drives (VFDs) on motors, LED lighting conversions, and high-efficiency compressors are also excellent investments. Start by analyzing your interval data to identify which equipment drives your peak.
Is battery storage worth it for demand management?
Battery storage can be highly effective for demand management, especially for businesses with predictable peaks. The battery charges during low-demand periods and discharges during peaks, reducing your measured demand. ROI depends on your demand charges—businesses paying over $15/kW often see payback within 5-7 years.
Ready to Reduce Your Demand Charges?
Our commercial energy consultants can analyze your usage patterns and recommend the most cost-effective demand reduction strategies for your business.
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