There are two key concepts to energy billing that we need to unpack today, both involving “demand.” First, your business’s demand charge is represented in the highest kW consumed during the billing period and applied to all the energy consumed. An unusual spike in energy consumption can raise your bill for the entire period, even if the remaining usage is normal. Second, the cost to generate a kW of power at any given point in the day is relative to how much power is needed at that time. If you consume a kW at noon, it's typically more expensive to generate than a kW at midnight, so the cost will be greater.
Peak shaving can help you save money in both ways:
- By reducing electricity consumption during high-cost periods.
- By reducing the demand change applied to the remainder of your bill period usage.
How Peak Shaving Works
Peak shaving involves reducing electricity consumption during periods of high demand, effectively "shaving" off the peaks in energy usage. This is typically done by reducing power consumption or introducing an on-site generation asset like a natural gas generator, battery, or solar.
Watch how our CEO Gabriel Phillips breaks down the generation stack for a deep dive into how the cost of generating power at a given time impacts your utility bill. He answers all of your questions on how the electricity market works, including how renewables can help you save money.
Effective Peak-Shaving Techniques
On-site Generation
Installing on-site power generation systems, such as solar panels, can provide an alternative energy source during peak demand. For instance, Catalyst Power’s Connected Microgrid® solution is installed behind your meter to directly reduce your peak demand without islanding you from the grid. For additional energy flexibility, pair your Connected Microgrid with a battery.
Battery Energy Storage Systems
Battery storage systems are a cornerstone of modern peak-shaving strategies. These systems store energy during off-peak hours when electricity is cheaper and discharge that energy during peak demand periods. It’s like packing your lunch to enjoy it later! This approach allows businesses to avoid high-cost energy consumption from the grid during peak times, which means more cost savings for your bottom line.
Learn more about battery storage here.
Load Curtailment
Load curtailment (or load shifting) is a technique that involves temporarily reducing non-essential energy consumption during peak periods. When the demand is high, facilities can reduce their consumption through curtailment, such as demand response programs, automated energy management like adjusting HVAC settings and dimming lights, or operational adjustments like briefly pausing non-critical equipment.
What’s Next?
Peak shaving is an essential strategy for commercial and industrial businesses looking to reduce their energy costs. By implementing techniques such as on-site generation, energy storage, and load curtailment, companies can significantly lower their energy expenses. Catalyst Power's behind-the-meter Connected Microgrid solution offers a sophisticated approach to peak shaving that can deliver substantial benefits to businesses while contributing to overall grid stability.
Want to take control of your energy costs? See how Catalyst Power’s solutions can help your business save.
