We have found that many customers are unaware how demand is measured and billed – even though demand charges often represent 30 – 70 percent of a commercial electric bill.

Currently, 25 percent of commercial customers in the U.S. – approximately five million – pay demand charge rates of more than $15/kW, a threshold that instantly justifies an investment in energy storage.

Defining Demand Charges

Demand charges are somewhat murky and daunting. Applied to commercial and industrial customers, they are typically calculated based on the point in time when wholesale prices are highest. If a company can pinpoint that 15 minutes or so and reduce its consumption, it can lower its energy bills for the whole billing cycle. To do so, the company must predict correctly when the grid will reach that period of peak demand and then act fast; very fast.

Energy storage is a particularly useful tool for the task because of its flexibility; as it is relatively easy to discharge the battery so that your facility uses battery power rather than grid power with the right timing.  Onsite solar can also be used to reduce demand charges, as well; however, the battery is still a critical piece of the solution because it is impossible to predict precisely when the weather will be cloudy.

An “Energy Management System” is a crucial factor in your solution.”  Foundation Power uses “learning algorithms” to gauge when a facility is approaching peak demand.  Add solar, and the management software can employ a more sophisticated demand management strategy.  At times, it may also mace sense to incorporate microgrid-level intelligence if more forms of distributed energy are added to the system.  In some cases, a microgrid may be warranted if the facility requires the added ability to island and secure power from its onsite resources during an unpredicted or unavoidable power outage.