Peak Demand Reduction with Energy Storage

For businesses, billing charges are based on a combination of the highest peak demand and the energy used per month. The peak demand cost if often more than half the total bill. Omnes Energy storage systems automatically reduce peak demand to generate large savings for businesses.

Peak Demand Cost

Electric utilities charge customers for the amount of energy used (basic energy cost) and the size of equipment required to provide this energy (peak demand cost). To determine the peak demand cost, the billing period’s peak demand (highest peak in a billing cycle) is measured. For instance, a customer may typically use 600 kW of power with a 950 kW peak. In this case, the peak usage is 950 kW. This peak is multiplied by the month’s demand rate ($20 / kW) to bill the customer $19,000 for peak demand costs. The peak demand rate is usually higher in the summer since more energy is used on average. In order to reduce peak demand, businesses can either stagger large loads or utilize energy storage systems.

Reducing Peak Demand

An energy storage system can charge during low usage hours and discharge during peak load times in order to reduce a business’ peak demand. This is shown in the figure below:


In this case, the desired peak demand is predicted through simulations and performance data, and the system automatically discharges when the business’ peak is above the desired peak and charges during times of low usage. Setting an optimal desired peak demand is important because if the peak is too low, the storage unit will run out of energy, and if the peak is too high, the peak demand could have been reduced even further. In this example, if the peak demand is reduced from 950 kW to 650 kW, at $20 / kW peak demand rate, the customer saves $6,000 per month. Key considerations for choosing an energy storage system to reduce peak demand are cost, ease of installation, roundtrip efficiency, charging / discharging rates, ramp up / ramp down rates, and daily operation requirements.

Find out more about how Omnes Energy’s products can help you reduce your peak demands here.