Battery energy storage (BES) reduces peak demand charges by employing a strategy known as peak shaving. Here’s how it works:
What are Peak Demand Charges?
- Definition: Peak demand charges are fees applied by utilities based on the highest rate of electricity used by a customer within a specified interval, typically 15 minutes, during a billing cycle. These charges are primarily for commercial and industrial customers, reflecting the need for higher power demands during peak times.
How Battery Energy Storage Reduces Peak Demand Charges
- Peak Shaving Strategy: BES systems charge batteries during off-peak hours when electricity rates are lower. This stored energy is then used to power operations during peak hours when demand is high, thereby reducing the need for electricity from the grid at peak rates.
- Load Profile Smoothing: By discharging stored energy during peak times, BES helps smooth out the load profile, which means it eliminates or reduces the high spikes in demand that trigger demand charges.
- Reduced Grid Dependence: By using stored energy during peak times, businesses decrease their reliance on grid power during these periods, thus lowering peak demand and the associated charges.
Economic Benefits
- Savings on Demand Charges: By reducing peak demand, BES can significantly cut demand charges, which can account for a substantial portion of commercial electricity bills.
- Increased Cost Efficiency: The ability to manage energy costs more effectively through peak shaving contributes to better financial management for businesses.
Additional Benefits
- Backup Power: BES systems provide backup power during outages, protecting against expensive downtime.
- Integration with Renewables: BES can enhance the use of renewable energy by storing excess energy generated during periods of low demand for later use.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-battery-energy-storage-specifically-reduce-peak-demand-charges/
