How to calculate the demand electricity charge based on energy storage installed capacity

How is a demand charge calculated?

To calculate the demand charge of a facility, the utility notates the highest average 15 minute period during a billing cycle. This is a surcharge on top of standard kWh rates and often times is a substantial portion of the total bill. To illustrate how a demand charge works consider the following examples:

How do you calculate a demand charge for 500 kW?

If the utility rate sets demand charges at $9.91 per kW, and the customer has a peak demand of 500 kW for the month (reflecting the 15-minute interval in which they consumed power at their highest rate), the demand charge would be calculated as: 500 kW * $9.91 = $4,955

How do demand charge rates work?

The total monthly cost of this type of utility bill is simple to calculate. Both the T&D and the supply charge are expressed as a rate—i.e., 15 cents per kWh. As a result, the more electricity you consume, the more your electric bill costs. How do demand charge rates impact you as a solar customer?

How do utility charges work?

Utilities apply demand charges based on the maximum amount of power that a customer used in any interval (typically 15 minutes) during the billing cycle. To determine the demand charge for a given month, the maximum power demand is multiplied by the demand charge rate of the prevailing utility rate.

What is a demand charge?

At its core, a demand charge shifts the charge on your electric bill from how much electricity you consume over an entire month to the maximum electricity you need at a single point during the month. Demand charges have historically been used for larger industrial electric customers but are beginning to appear for residential customers.

What are energy demand charges?

For commercial customers, energy demand charges account for a large portion of your total costs. This article outlines different ways to control energy demand and reduce energy demand expenses. Energy demand charges can be difficult to understand for most consumers.