Peak Demand

How to Avoid the Most Expensive Energy Cost: Peak Demand

Every month, your utility bills have two primary charges: (1) consumption and (2) demand. Consumption, or power, is measured in kWh, and you are charged for the amount of energy you use over the course of the month. Demand, on the other hand, is measured in kW, and represents the highest amount of power you use at a given time.


Understand Your Utility Bill

You are charged for consumption at two different rates: on-peak and off-peak. On-peak charges occur when the majority of buildings are using a lot of energy. This can be early in the morning during the winter when buildings are heating up, and during the afternoon during the summer when buildings are working to cool down.
Additionally, you are given a “speeding ticket” for your highest demand of the month during on-peak hours. This charge is based on the highest average demand over a 15-minute interval. Therefore, the key to avoiding peak demand charges is to not use too much energy at any one time.

Why You Are Charged for Peak Demand

Utility companies have to invest in the infrastructure to account for the highest demand needed on the electrical grid, so power can be generated and delivered flawlessly. Their goal is to avoid having every customer in a single area need a copious amount of energy at the exact same time. To limit the demand, they penalize you based on your highest peak.


Three Ways to Reduce Peak Load:


1. Start your buildings an hour earlier

During building startup time, it can be less expensive to use the same amount of energy over a longer amount of time. By starting your building at 5am instead of 6am, you have an extra hour to reach the desired indoor temperature, without hitting a high peak demand.


2. Stagger equipment start times

The moment you start a piece of equipment, the inrush current will use up to 600% of its normal energy for the first few seconds. By starting your HVAC, lighting, and office equipment at the same time, you can create a significantly high peak in just a few seconds.
In order to avoid high peak demand costs, try to stagger your equipment start times as much as possible. If possible, do not turn on all of your HVACs or lights at the same time.





3. Use fans to circulate air.

Peak demand costs are actually significantly more expensive during the summer than during the winter. During the winter, peak hours can be from 7am-10pm, while summer peak hours are from 10am-10pm. Winter peak hours start earlier because buildings require a lot of energy in the morning while they are heating up.
Summer peak hours are more expensive because it is significantly more taxing to keep buildings cool when the sun is beating through the windows during the day. Even well-insulated buildings have trouble keeping cool. Summer days that are really hot (i.e. greater than 100 degrees) require up to 30% more energy than normal hot days (i.e. 85 degrees).

There’s a lot of controversy over whether using ceiling fans to keep buildings cool is efficient. The answer is yes, as long as you use them wisely. The idea is to keep fans on for a limited amount of time, and to raise the air conditioning set temperature by about four degrees while using fans. In order to keep your summer peaks low, use fans during the hottest days, and make sure tenants keep their shades closed so the radiated heat stays out.


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Real-Time Energy Data Can Keep You On Track

The main problem with utility bills is that they only come once a month. Even with staggered start times and seemingly efficient energy consumption, you can end up with a high bill at the end of the month because of your demand charges. Real-time data can keep you on track throughout the month so you can monitor energy consumption and identify peaks that are too high. Additionally, real-time alerts will let you know if there is an unexpected problem, so you don’t have to wait until the end of the month to find out your peak load was twice as high as you expected.

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