Our second featured Energy Efficiency Measure (EEM) focuses on peak demand shift. This series will continue to highlight EEMs that we regularly see when working with our commercial, institutional, and industrial customers.
Definition & Background
In addition to consumption fees, many utility bills include demand charges, per-kW fees based on the highest interval of demand (kW) recorded during your billing cycle. For most industrial and manufacturing facilities, peak demand charges can be a major expense - generally 30% or more.
Customer: Commercial conditioned space
Nearly every rate structure features demand charges. Utilities use them to help monetize the excess capacity they need to meet demand peaks. Whether or not building scheduling can help you cut your energy bill depends largely on your building's energy use patterns and the specific rate structure offered by your utility. In this case, our customer was an operator of commercial conditioned space in suburban Washington, D.C.
Problem: On peak demand charges
Building owners often tweak their equipment scheduling to optimize the tradeoff between consumption and demand charges. In this particular jurisdiction, our customer faced a high demand tariff applied to the maximum "on peak" demand over a trailing eleven month period, where "on peak" was defined as 7:00am to 10:00pm on weekdays during winter months.
Because of the relatively high "on peak" demand charge and a comparatively low consumption charge during off-peak hours, our customer would start their building hard and early and then coast into the "on peak" period.
As seen in the chart above, on a typical weekday our customer would start all the building systems simultaneously at around 3:45 am, and then allow energy consumption to trail off throughout the day.
Using real-time energy monitoring, including the Load Duration report offered with Insight, EnerNOC analysts discovered that the building's energy demand was still elevated from the morning start-up by the time that Peak Hours began. Thus, unbeknownst to our customer, the building's high-water mark for "on peak" demand was higher than it should be, resulting in excessive demand charges.
Resolution: No cost scheduling adjustment
In this case, the customer was on the right track: the facilities team deliberately started the building before peak hours began, but the lack of visibility into their building's consumption prevented them from fully optimizing its operating schedule.
We recommended that the customer begin their building start-up even earlier and continue the policy of coasting into the on peak hours. This actually caused the cusotmer to use more energy, but it shifted most of the period of elevated demand into "off peak" hours. The large savings realized from lower demand charges during the "on peak" period more than offset the increase in consumption costs. We estimated that this customer fully adjusting its operating schedule would cut peak demand by about 27%, resulting in $4,000 per month in savings during the heating season.
EfficiencySMART Insight helped this customer save almost $20,000 over the course of the heating season by better managing their consumption pattern. Your team can also leverage the power of real-time metering and energy data analytics to reduce your energy bill.
Peak demand charges and other tarrifs can vary widely across regions and utilities, but there is no need to worry. Insight includes regular meetings with our A-team of energy analysts who can help your organization better manage its energy use at a single building or across a portfolio. For each building and rate structure, they'll provide you with actionable steps on how to manage your operations to minimize energy costs without impacting performance.