How to reduce demand charges
Because one short peak sets the charge, the goal is to find that peak and flatten it. Small cuts to the highest interval can matter more than cutting total energy.
Common approaches
- Find the peaks first: look at the interval that set each month's demand and what was running.
- Stagger starts: avoid starting large motors, chillers or chargers at the same moment.
- Shift flexible load: move processes or EV charging to times away from your peak.
- Controls or storage: a demand limiter or battery can cover short peaks. Whether it pays depends on your rate and load shape.
- Review the rate: a different rate class can trade a lower demand charge for a higher energy charge. Ask your utility.
Worked example
Illustrative numbers, not a real rate: a demand charge of $15 per kW-month and an energy charge of $0.08 per kWh.
| Peak today | 500 kW |
| Peak after staggering starts | 450 kW |
| Monthly change: 50 kW x $15 | $750 |
| If it holds all 12 months | $9,000 |
The saving only counts if the lower peak holds in every month, and a ratchet can change it. Peak Ledger shows the interval behind each month's peak so you can check.
Frequently asked questions
Will a battery always pay off?
No. It depends on your demand rate, how tall and how long your peaks are, and the cost of the system. Model it with your own data first.
Is cutting energy use the same as cutting demand?
Not necessarily. You can use less energy and still set the same peak.
How quickly do savings show up?
Demand is billed monthly, so a lower peak shows on the next bill, subject to any ratchet in your tariff.
Try it on your own numbers
All numbers on this page are illustrative, including the rate. They are not a real utility tariff. Your bill depends on your utility rate schedule; check it before acting. Peak Ledger gives estimates, not a utility bill or an engineering design.