Demand charges account for as much as 40-70% of your business’s monthly utility bill. But these charges may be the easiest cost component of your utility bill to control.
What are demand changes?
Demand charges on a commercial or industrial electricity bill are applied based on the highest interval of electricity usage during any billing period. The kilowatts consumed during that period, typically a 15 minute interval, are multiplied by the demand rate and can sometimes account for up to 50% of the electricity bill.
These charges allow utilities to recover their costs of having enough capacity within the grid to have the electricity available when needed. These intervals are often referred to as “peak” times. In the summer, this often occurs midafternoon when air conditioners are being maxed out. At times of peak demand, the utilities must have extra power production units in place and on demand. Should they not be able to produce enough electrons to pull from the grid, consumers will have intermittent power outages at times they need it most. To prevent that from occurring even just a few times a year, power generators have to maintain this equipment year-round.
How are demand charges calculated?
Typically, demand charges are calculated during the highest 15 minutes of power usage during the month. For a manufacturer that fires up their equipment all the same time at 7am, this demand charge is likely to occur then. For a business operating air conditioning all day for the comfort of their customers, this interval is often during the hottest time of the day. If this equipment is running during the day when the sun is out, then solar can be effective in reducing these demand charges. For example, pre-solar charges were hitting at 2pm and around 100 kW a month. Post-solar, the panels are providing the electricity and they are not pulling from the grid at this time – the highest interval is now at 9am in the morning when the air conditioning is running less.
What we can do for you
Genie Solar Energy wants to maximize the impact solar can make on your electricity bill. By incorporating a Smarter Meter with every solar system we install, we help customers significantly reduce demand charges. The Smarter Meter gives real-time information on how and when electricity is consumed. Are the cleaning people turning on all of the lights all night? It provides enough data to give insight on how to shift your consumption to lower your demand charges. And your advisors at Genie Solar Energy are here to help.
To find out how we can help you reduce your total energy bills including the demand component by speaking with a solar expert today!
