Defeat Demand Charges, Reduce Electricity Costs

Some businesses, in addition to paying a standard use rate, also pay a demand charge related to their highest use of electricity over a 15-minute interval.

Utilities need to meet the peak electricity use for their customers, and they can charge business customers extra when there is more demand. Businesses, however, might be paying for a peak demand that they can avoid.

How can businesses reduce their demand charges?

The first step is to know what is contributing to your electricity bill and when. Installing a detailed energy management system is essential when electric bills are more than $1000 a month. Ideally, the system will monitor every circuit in the building/facility. When you can see electrical use for each circuit, you can find out what equipment used the most electricity during your peak energy use.

Residential demand charges are usually different - there are peak times when electricity is more expensive. If you use power then, you will pay more per kilowatt-hour. If you use it at off-peak times, you pay less. For commercial power users, peak demand in a 15-minute interval is the key. "Gaming the system" involves avoiding peak use above the threshold for long durations.

Once you have an energy management system installed, you have valuable information can act upon.

Below is a table from the reports section of the SiteSage Energy Management System offered by PowerWise. It compares usage and demand charges in a summary view.

SiteSage calculating energy costs by month

Immediately we can see that the monthly demand cost for the last month was about the same as it was during the same 30 days last year. That tells us that operations are consistent. The bar graph below is also part of the report page, and gives information about usage by equipment. It shows comparisons of equipment, with the highest users at the top, and compares the last 30 days to the previous 30 days.

SiteSage calculating energy costs by equipment or circuit

In addition, your energy management system should alert you when equipment is performing outside electrical or cost limits. Ideally, you can set those limits, as in the example SiteSage alert below. This will keep malfunctioning equipment from resulting in excessive demand usage.

SiteSage alerts for savings

Set alerts to let management staff receive email or text alerts when approaching peak demand. Set a percentage change so that people can be aware of an approaching problem.

Avoid clustering power use

The reality is, you have to run your business equipment during business hours. Restaurants use ventilation and heating/cooling at peak levels during business hours. But starting up all exhaust fans at once when employees arrive may cause a peak load. Instead, setting temperature thresholds for fan startup can reduce cluster loading. Staggering the scheduling of HVAC zones by 15 minutes or more may also help keep power use from reaching the peak load threshold.

Many businesses have electricity-based equipment critical to their operations. For example, a manufacturing plant has to run milling and mold machines during peak hours. There’s no getting around it. However, when large motors start up, they draw a large amount of power at the beginning, then level off use at speed. Staggering machine startups or starting equipment when it’s actually needed, may help keep power use under peak thresholds. Another strategy is to shorten the time power is above the threshold. Some companies have even gone the route of staggering shifts and transferring workload to times of lower per-kilowatt-hour charges.

A heatmap for energy use

A heatmap of peak energy use can show at a glance where problem areas are. The dark red days represent the highest use days. In the map below, while energy use is quite high during business hours on weekdays, mid-mornings and evenings on Monday and Tuesday are problem times.

SiteSage heat map for demand charges

Monitor and manage employees

Keeping power use spread out rather than clustered is an effective approach to reducing demand charges. It depends so much on individual business and equipment characteristics that the solution for one business may not work for another. A bit of experimentation and creative scheduling can make a big impact on the bottom line. Training your employees, not just in adjusting equipment use, but in why they are adjusting, can save a business thousands of dollars.

A capable, highly granular energy monitoring and management system is an essential tool for analyzing energy use in order to implement policies to generate savings, with a very short payback time and a demonstrably high ROI.

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