How Peak Shaving Reduces Electricity Costs for Businesses
Peak shaving is a strategy used by businesses to lower their electricity costs by reducing power consumption during periods of high demand. This approach is particularly beneficial for commercial and industrial customers, as it helps minimize demand charges, which are a significant portion of their utility bills.
Key Mechanisms for Cost Reduction
- Reducing Demand Charges
- Primary Benefit: Peak shaving cuts down on the highest power consumption rate within any billing period, which directly lowers demand charges. These charges are often based on a 15-minute interval where the highest usage is recorded, and this maximum usage determines the tariff for the entire billing cycle.
- Utilizing Local Power Sources
- Businesses can use on-site generation systems such as solar panels or battery energy storage systems to reduce their reliance on the grid during peak hours. By storing energy during cheaper off-peak hours and using it during peak times, businesses can significantly reduce their electricity expenses.
- Energy Storage Systems (ESS)
- ESS like battery storage systems are crucial for peak shaving. They allow businesses to store energy during low-demand periods and discharge it during high-demand times, thus avoiding high-cost electricity from the grid.
Practical Applications and Benefits
- Reduced Grid Fees: Peak shaving helps optimize power flows and minimize grid fees by ensuring that power consumption does not exceed a certain threshold, even during peak hours.
- Integration with Renewable Energy: Peak shaving can be combined with renewable sources like solar power. This integration allows businesses to utilize stored solar energy during peak periods, further reducing costs and promoting sustainability.
- Load Management Flexibility: Peak shaving is suitable for flexible and inflexible loads. For inflexible loads like manufacturing processes that must run continuously, energy storage solutions are particularly effective.
Conclusion
Peak shaving is a highly effective strategy for businesses to manage and reduce their electricity costs by minimizing both consumption costs and demand charges. By employing techniques such as on-site generation and energy storage, businesses can achieve significant cost savings and contribute to grid stability.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-peak-shaving-help-reduce-electricity-costs-for-businesses/
