Peak shaving to reduce peak demand charges

For many businesses it is important to look at using battery storage to reduce peak demand charges.  Often, even one large energy spike can greatly increase total energy bills with this drawdown increasing the energy charge for all power usage. If the peak demand needed can be reduced then the overall electricity charges can be reduced.

Peak demand usually occurs when several high energy using pieces of machinery come into use at the same time, particularly if this machinery has large initial starting energy draws.

Peak demand is usually calculated based on the highest 15 minute average usage over a given month, even if it only occurs once a month (some energy retailers actually use the maximum usage over a yearly period, again even if this maximum only occurs once a year).  These demand charges are also often charged on a tiered scale with higher charges the higher the peak is.

These peak demands, if even for a short period of time, cause problems for electricity providers so to discourage them and to encourage businesses, often manufacturing factories, to reduce these peaks, they add “peak power demand” charges or raise the price of electricity usage to cover these peaks.

Businesses are allocated a certain amount of power usage on a daily or monthly basis which is calculated at x cents per kWh. There is also a “poles and wires” charge and “demand charges” are added on top of this bill.

This demand charge component has been creeping up over recent years and often takes up a high proportion of the bill, which is why many businesses are looking at PV and battery storage to reduce their spikes to reduce these demand charges.

Power supply companies have to be able to allow for a business’s maximum energy usage, even if this only occurs once a day, once a month or if it occurs several times a day. This amount is then used as a peak power amount and charged as a “peak power demand” charge and is added to the electricity bill. If this peak demand only occurs occasionally or is considerably higher than the usual power draw it can add considerably to the overall electricity bill.

If you can reduce your spikes of power usage you can reduce your “peak power demand” charges as a proportion or your power bill and pay for the power you actually use rather paying for the power that you need to be available in case you may need it.

Solar PV and energy storage batteries are one way to reduce these peak energy demands. A particular energy usage level is set and whenever that limit is reached, power usage will come from the batteries rather than the grid supply. Batteries will continue to supply energy needs until the demand is reduced below a predetermined level or the battery capacity runs out. Batteries can be recharged from any excess PV generation or can be charged overnight at off-peak rates.

Not all batteries are capable of supplying these peak energy demands as not all batteries can handle fast drawdowns or continuous high draw loads. The SoNick (sodium nickel chloride) battery can handle very fast discharges for an extended time making them the perfect battery technology particularly for large draw manufacturing businesses.

Often the use of battery storage can shave the top off “peak usage” enough so that, if appropriately sized and with sufficient discharge capacity, significant savings in power bills will occur – in some cases enough to pay the battery off reasonably quickly.

Although battery storage is one way for businesses to reduce their peak demand, they can also try and reduce the number of machines that come online at any one time (not always easy to do). Also, if possible high energy intensive machines or non-essential equipment can be scheduled for lower load times of the day, which may help to reduce spikes in demand at peak usage times.

This staggering of equipment usage can be done manually or with timers but can also be done electronically with a variety of “smart load management” systems. You can install a device that prevents two or three pieces of high energy usage equipment from operating at the same time.

Solar PV generation, directly from the sun is maximized during the day which is often when maximum power usage occurs. This will help to reduce overall demand and mean spikes are lower when they do occur. However, on a cloudy day or at night spikes can still occur so this is when battery storage can be the most effective way to reduce peak demand charges.
If you are interested in getting more information on a safe, reliable energy storage battery that has a high drawdown capability, with a recycling program already in place, has no maintenance requirements in use, is non explosive, cannot catch fire and go into thermal runaway and has no toxic materials in its manufacture visit us at

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