What Is Peak Demand and How It Affects You | Titan Energy

Written by Titan Energy | July 6, 2021

Action during peak demand can save money for electricity consumers

Consumers have a unique opportunity to support grid reliability and lower their energy costs by managing electricity use during periods of peak demand.

Through participation in Peak Load Management programs, businesses and organizations can strategically reduce or shift energy usage during high-demand hours—helping to stabilize the grid while also realizing significant financial benefits.

By implementing a demand reduction strategy, facilities not only lower their electricity supply rates but can also earn substantial payments for their performance—often amounting to thousands of dollars annually. It's a smart, sustainable way to take control of energy expenses and contribute to a more resilient energy future.

When does peak demand occur?

Peak Demand refers to the hour when the electricity grid experiences its highest level of usage—most often during the hottest hour of the hottest day of the year.

Historically, these peak events occur during the summer months (June through September), typically on weekday afternoons between 3:00 p.m. and 6:00 p.m., when air conditioning and overall energy usage are at their highest. Identifying and preparing for these critical hours is key to optimizing energy strategies and reducing costs.

What are peak demand charges?

On peak demand days, grid operators assign each customer a "Capacity Tag"—also known as an Installed Capacity (ICAP) Tag or Peak Load Contribution (PLC)—based on the facility’s energy usage during the single highest-demand hour of the year.

While not always itemized on your utility bill, these capacity charges are a real and significant component of your monthly energy costs. Depending on your facility’s load profile, capacity costs can account for 15% to 45% of your total electricity supply expenses.

In most cases, these costs are embedded within a fixed supply rate and managed by your utility or retail supplier behind the scenes. Alternatively, some customers opt to "pass through" capacity charges, paying them as a separate, fixed line item on each monthly bill over the capacity year, which runs from June 1 to May 31. Understanding and managing your Capacity Tag is essential for long-term energy cost control.

Your electricity cost components.

Lower your capacity tag and save money.

When you receive a Peak Demand notification from Titan Energy, your opportunity to save and earn is within reach.

By strategically reducing or shifting your electricity usage during peak periods, you can significantly lower your future Capacity Tag—leading to a reduced supply rate and eligibility for valuable Demand Response payments.

To maximize results, it’s essential to partner with an experienced energy management advisor like Titan Energy. We help design, implement, and track your demand reduction strategy to ensure your curtailment efforts are both achievable and accurately rewarded.

Traditional efficiency reduces overall consumption, but does not shift peaks.

Peak demand reduction reduces peaks, but does not reduce net consumption.

Actions to help reduce demand can be simple.

Titan Energy works closely with your facility to develop a customized electricity reduction strategy that balances operational needs with energy savings.

Using detailed analysis of your facility’s historical load data, we identify targeted opportunities to reduce demand without disrupting core operations. Common strategies include dimming non-essential lighting, adjusting thermostat setpoints, or temporarily pausing select equipment or processes.

We also explore innovative approaches—such as leveraging backup generation, battery storage, or solar-plus-storage systems—to minimize demand during peak hours. With Titan Energy’s expertise, your facility can reduce costs, enhance grid resilience, and maintain business continuity.

Temporary actions taken to reduce capacity:

💡Turn down non-essential lighting.

🌡️Temporarily lowering air conditioning capacity .

⚙️Pausing use of pumps and non-essential equipment.

📶 Installing smart thermostats and load switches.

View full post