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

Written by Titan Energy | July 6, 2021

Peak Demand

Action during peak demand can save money for electricity consumers

Consumers have the opportunity to play an important role in the operation of the electricity grid by reducing or shifting their electricity usage during times of Peak Demand.

During these peak hours, customers are able participate in Peak Load Management programs which can both help reduce their electricity supply price, as well as pay them for their energy reduction performance. When a facility launches a strategic demand reduction plan, a facility can easily shift operations and earn thousands of dollars each year.

What is peak demand?

Peak Demand is the hour in which an electricity grid experiences its highest electrical demand – typically the hottest hour of the hottest day of the year.

1. When does peak demand occur?

Historically, Peak Demand days have occurred in the heart of summer (June to September), usually on weekdays between the hours of 3 and 6PM.

2. What are peak demand charges?

On peak demand days, the electricity grid operator assigns each customer a “tag” based on their facility’s total kilowatt hours used on the peak hour of the peak day of the year. This is often called a “Capacity Tag” (ICAP) or “Peak Load Contribution” (PLC).

Though it is often not line itemed on your bill, you are responsible for paying these capacity costs on your utility bill each month. Depending on your load factor, capacity costs can make up anywhere between 15 to 45% of your overall energy supply costs. In most cases, these costs are bundled into your Fixed supply rate, and covered on the back end by your retail supplier or utility. In some cases, customers choose to pass through their Capacity costs, where they are billed separately as a fixed dollar amount on each bill throughout the course of a capacity planning year – which run from June 1st to May 31st of each year.

Your electricity cost components:

3. Lower your capacity tag and save money

Once you receive a Peak Demand notification from Titan Energy (click here to sign up for these urgent notifications (Link)), your ability to earn and save money is at your fingertips. By temporarily reducing and shifting your electricity usage, you can lower your capacity tag for the following year – thereby lowering your supply price, and earning you Demand Response payments.

It is vital to have an experienced energy management consultant like Titan Energy to help design, implement and report on your strategic reduction plan, helping to ensure your curtailment plan is realistic and your earnings are correct.

Traditional efficiency reduces overall
consumption, but does not shift peaks

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

4. Actions to help reduce demand can be simple.

Titan Energy helps your facility plan for a specific electricity reduction strategy. After running an analysis on your facility’s historical electricity load, we work to identify a few key areas where you can curtail energy and still meet the needs to run your business. Examples include adjusting non-essential lighting, adjusting building thermostat temperatures, or temporarily shutting down machinery. We can be creative. Some facilities are able use backup storage, backup generators or solar plus storage to minimize demand at peak times.

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

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