Demand charges are the second-largest line item on most commercial electric bills after energy (kWh) charges. They measure the peak instantaneous kW draw of your facility during a defined 15-minute window. A single peak event can drive the demand charge for the whole month. Four strategies cut peak demand without cutting output: stagger major equipment startup, install battery storage, schedule production around peak hours, install power-factor correction.
The kW vs kWh difference
kW (kilowatt) is a measure of instantaneous power — how hard the facility is drawing right now. kWh (kilowatt-hour) is a measure of total energy — kW times hours.
A facility can have low total kWh but a high single-minute kW peak. The demand charge is set by that single peak, not by the total kWh consumed.
Four strategies to cut peak demand
Strategy 1: stagger major equipment startup so that compressors, motors, and chillers do not all hit peak simultaneously. Strategy 2: install battery storage to discharge during peak windows.
Strategy 3: schedule production around utility peak hours. Strategy 4: install power-factor correction to reduce apparent kW (kVA) at the meter.
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