How Energy Storage Systems Help Reduce Peak Demand Charges
Energy storage systems (ESS) play a crucial role in reducing peak demand charges by optimizing the timing of energy use, especially for commercial and industrial customers. Here’s how these systems help mitigate peak demand charges:
1. Understanding Demand Charges
- Definition: Demand charges are fees based on the highest amount of power used during a specific interval (usually 15 minutes) in a billing cycle, typically in kW (kilowatt) rather than kWh (kilowatt-hour).
- Impact: These charges can account for a significant portion of electricity bills, often up to 30% to 70% for large commercial users.
2. Peak Shaving with Energy Storage
- Process: Energy storage systems charge during off-peak hours or from renewable sources like solar, when energy is cheaper.
- Usage: The stored energy is then discharged during peak hours to reduce the amount drawn from the grid, effectively “shaving” the peak demand.
- AI and Predictive Software: Modern systems use AI-powered software to predict peak demand spikes and switch automatically to battery power when needed, ensuring that grid usage remains below a predetermined threshold.
3. Benefits Beyond Peak Shaving
- Backup Power: Energy storage provides critical backup power during grid outages, protecting facilities from costly downtime and equipment damage.
- Self-Consumption: It enhances self-consumption of on-site renewable energy, further reducing reliance on the grid and lowering overall energy costs.
4. Cost Savings and Feasibility
- Economic Viability: Demand charge savings can often justify the cost of energy storage, particularly in regions with high demand charges ($15/kW or higher).
- Financing Options: Incentives and financing models, such as solar Power Purchase Agreements (PPAs), can help cover initial investment costs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-energy-storage-systems-help-reduce-peak-demand-charges/
