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Demand charges 101 (and 7 quick fixes)

by Charles (Chuck) Tralka

Energy Strategy Consultant

Summary

Demand charges bill you for your highest 15–60 minute average kW during a billing cycle. One bad spike can cost you all month. The goal is to avoid coincident peaks by adjusting when and how loads start.

What “demand” actually is

Energy (kWh): how much electricity you use over time. Demand (kW): your highest rate of use—often the max average over any 15–60 minute window. Utilities set on-peak windows (e.g., weekdays 4–9 pm) where demand is most expensive.

Rule of thumb: If demand charges are ≥ 25–40% of your bill, peak control is a high-ROI priority.

Check the tariff (or last bill) for on-peak time blocks and demand ratchets. Note if weekends/holidays are excluded.

Staggered HVAC starts, process loads (compressors, pumps, EV charging, defrost cycles), and exterior/lot lighting are common culprits.

Seven quick fixes (no hardware)

  1. Stage HVAC starts: offset RTUs by 2–5 minutes each during morning startup and before on-peak windows.
  2. Set a “peak guardrail” setpoint: nudge cool setpoint up 1–2°F (or heat down) only during on-peak; exclude critical zones.
  3. Shift non-urgent tasks off-peak: laundry, dishwashers, cleaning equipment.
  4. Trim exterior/lot lights: delay on-time by 15–30 minutes and/or dim partial circuits.
  5. Schedule EV charging: cap Level-2 charging during on-peak; push bulk charging to off-peak; limit DC fast during peak.
  6. Coordinate defrost cycles (grocery/cold storage): stagger defrost; avoid launches at start of peak.
  7. Pre-cool or warm-up before peak: pre-condition 30–60 minutes before the on-peak window.

Simple check:

Did demand charges drop?

Compare kW peak this month vs. last month (same season). Savings: demand reduction (kW) × demand rate ($/kW).

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10-minute checklist

  • On-peak window and ratchets identified
  • HVAC starts staggered (AM + pre-peak)
  • Peak-window setpoint adjustment active (safe zones only)
  • Non-critical tasks moved out of peak
  • Lot/exterior lights trimmed or staggered
  • EV charging capped/scheduled
  • Defrost cycles staggered away from peak
  • Pre-conditioning used where feasible

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