Energy storage systems reduce peak demand charges through load shifting and peak shaving, lowering commercial electricity costs by managing power consumption during high-demand periods. Here’s how:
1. Peak Shaving with Energy Storage
Battery systems discharge stored energy during peak demand to avoid drawing high power from the grid, flattening the load profile.
- Mechanism: Charge batteries during off-peak hours (low-cost electricity) and discharge them during peak times to offset grid usage.
- Impact: Reduces the maximum power draw recorded for billing, directly lowering demand charges, which can account for 30–70% of commercial electricity bills.
2. Load Shifting for Demand Charge Avoidance
Energy storage shifts consumption away from expensive peak periods:
- EV charging example: Batteries supply power to fast chargers during peak hours, preventing grid demand spikes that trigger charges.
- Cost reduction: Systems target demand charges exceeding $15/kW, with savings amplified at rates above $20/kW.
3. Behind-the-Meter vs. Grid Export
- Behind-the-meter storage: Reduces a customer’s grid demand by powering onsite loads, avoiding infrastructure upgrades but risking stranded energy if load drops to zero.
- Grid export: Exports surplus stored energy but may require costly grid upgrades due to limited hosting capacity.
4. Complementary Benefits
- Backup power: Provides resilience during outages, avoiding operational downtime costs.
- Renewable integration: Stores excess solar/wind energy for later use, enhancing self-consumption and reducing reliance on fossil-fueled peaker plants.
Key Takeaway: Energy storage optimizes demand charge reduction by intelligently managing power flows, with effectiveness depending on utility rate structures, battery sizing, and dispatch timing.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-energy-storage-help-reduce-peak-demand-charges-2/
