For many customers, electricity use is metered and charged in two ways by your utility: first, based on your total consumption in a given month, and second, your demand, based on the highest capacity you required during any 15 to 20 minute period during the monthly billing period.
If electricity were water, consumption would be the amount of water you used and demand would be the size of the pipe you required for your peak usage.
National Grid explains: “Some [commercial and industrial energy users] need large amounts of electricity once in awhile – others, almost constantly.” And because electricity can’t be stored, this gets even more complicated, so “meeting these customers’ needs requires keeping a vast array of expensive equipment – transformers, wires, substations, and generating stations – on constant standby.” While in some areas all customers are assessed a demand charge, the idea is that the customers who create this exceptionally high demand are then correspondingly charged more for it.
If two companies use the same amount ( kWh) of electricity and one uses it a constant low (kW) rate and the other intermittently and therefore has periodically higher peak (kW) usage the second company may have a significantly higher bill.
Peak kW can be Managed
Gaining visibility to your energy data will illuminate ways in which you can save money that you wouldn’t otherwise be able to identify. Looking at your real time energy data with Energy Watchdog or other building management system will show you when your demand for electricity is greatest and will allow you to develop strategies for lowering those peaks – and thus, your demand charges. If you have already taken measures to lower your peaks, and thus decrease demand, or lower overall electricity use, or consumption, your data will indicate the impact of these efforts.
Consider no or low-cost energy efficiency adjustments you can make immediately. When you start up your operations in the morning, don’t just flip the switch on all of your high intensity equipment. Consider a staged start-up: turn on one piece of equipment at a time, create a schedule where the heaviest intensity equipment doesn’t all operate at full tilt simultaneously, and think about what equipment can be run at a lower intensity without adverse effect. You may use more kWh – resulting in greater energy consumption or a higher “energy odometer” reading as discussed above – but you’ll ultimately save on demand charges and your energy bill overall will be lower. If you need help developing a plan to reduce kW consider an Energy Assessment.