Yes, peak shaving can significantly help reduce demand charges. Peak shaving involves reducing electricity consumption during periods of high demand to “shave off” the peaks in energy usage. This strategy is particularly effective for businesses facing high demand charges, as these charges are often based on the highest power consumption rate during any interval, typically 15 minutes, within a billing period.
How Peak Shaving Reduces Demand Charges
- Reducing Peak Demand: By using battery energy storage systems or on-site power generation (like solar or natural gas generators), businesses can reduce their reliance on the grid during peak hours. This reduces the peak demand measured by utilities, leading to lower demand charges.
- Energy Storage: Battery energy storage systems store energy during off-peak hours when electricity is cheaper and discharge it during peak demand periods, thereby reducing the amount of electricity purchased from the grid at higher rates.
- On-Site Generation: Initiatives like solar panels can provide an alternative energy source during peak periods, further lowering peak demand and associated costs.
Benefits of Peak Shaving
- Cost Savings: Reducing demand charges can lead to significant financial savings, especially for commercial and industrial customers.
- Grid Stability: Peak shaving helps reduce strain on the grid during high-demand periods, contributing to overall grid stability.
- Flexibility: This strategy allows for continued operation of critical systems during peak hours while lowering costs.
In summary, peak shaving is an effective strategy for managing and reducing demand charges by lowering peak electricity consumption, thereby saving businesses money and contributing to a more efficient grid operation.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/can-peak-shaving-help-reduce-demand-charges/
