Most people already know the general benefits that rooftop solar provides such as reducing electricity costs, boosting property values, and reducing carbon emissions. But, did you know that solar can help lower peak demand charges?
In Nevada, peak power demand affects all commercial and business ratepayers. Peak demand occurs during times when generation, transmission, and distribution resources on the grid are being used at maximum capacity.
Understanding Demand Charges
A demand charge is the amount associated with the highest rate of electrical flow consumed in 15 minute intervals at one time during a monthly billing period. Demand charges occur mostly when users consume large amounts of electricity in a shorter time period. Spikes can trigger high demand charges, whereas consistency in energy usage will temper the bill. To avoid spikes, which occur when you start high intensity equipment or processes all at once, try to avoid doing so during on-peak hours.
The reason that demand charges exist is because it is costly for utilities to always have power at the ready for customers at any given time. It is expensive to maintain equipment on constant standby. Utilities do not know for certain that a peak demand will incur, but they must still be prepared for that scenario if and when it does. Also, the demand charge allows for an equitable billing process in that customers who consume more electricity at higher speeds in shorter time periods during on-peak hours will be charged more for doing so.
Currently, in the state of Nevada, residential customers are not subject to demand charges. However, that may change in the future as utilities are moving towards instituting the demand charge as a standard part of the residential rate.
Calculating Demand Charges
Energy consumption is defined as the overall electricity usage, and demand is the peak intensity of that usage. Consumption is measured in kilowatt hours (kWh), and demand is measured in kilowatts (kW). The calculation of a customer’s demand is based on taking the demand interval with the highest energy consumption and dividing it by the length of the demand interval in hours.
Following is an example of how a demand charge affects two companies differently according to their usage, even if their consumption is equal:
Solar Counteracting High Demand Charges
Solar can help reduce demand charges, but not completely eliminate them. When solar systems feed excess electricity back to the grid, this reduces the overall peak demand on the grid, thus enabling market prices for electricity to be lower. If a customer’s energy consumption can be covered mostly by their solar system, then they can reduce the rate of demand from which they draw electricity from the grid. Also, if businesses only operate during the daytime when the sun is out, then solar would be able to provide for the businesses’ energy needs if the main demand is during that time.
During summertime months, energy consumption is at its peak, and utility companies struggle to keep up with the demand. Solar helps to offset some of that demand. In certain regions, solar has been found to help prevent power outages and rolling blackouts, thus strengthening the grid. To better manage energy usage to help reduce peak demand, involve common methods such as installing energy-efficient equipment, downsizing equipment, and scheduling work or processes to times of the day when electricity rates are cheaper.
The benefits that solar provides such as reducing impact on the grid, lowering the cost of electricity, and minimizing carbon emissions are invaluable. Please contact Sol-Up to get a free quote and start your path to managing your energy habits better.