Understanding Electricity’s Maximum Demand

Electricity tariffs are rising hence understanding your energy bill is the first step to control your energy use and reduce costs.

There is often a figure shown as Maximum demand. What does it mean and why should you be interested?

Electricity use is metered and charged in two ways:

  • Total consumption (kWh) in a given month.
  • Maximum demand (kW or kVA) i.e the maximum power value during a specified time interval, usually the average of 15 minutes (may vary) reached during the billing period.How is commercial electricity demand charges calculated?An MD charge varies with the tariff policy and is calculated as the average power used over the defined billing interval (10, 15 or 30 min) either by sliding window or fixed demand calculation depending on customer usage.If your facilities tend to use a lot of power over short periods of time, demand charges will make up a much larger part. Substantially, you’ll be paying more because of your usage spikes. Let’s consider the examples belowCompany X steadily requires 100 kW over the line of a 720-hour month.Energy usage = 72,000 kWh (100 kW x 720 hours); Utility charges = Rs.11 per kWh; Energy charges they pay Rs. 792000; Demand charges = Rs.350 per kVA per month; since their maximum power requirement for any demand interval was 100 kW, they’ll also pay Rs. 38888.85 in demand charges for the month (Rs.3508 x 111.111 kVA)Here demand charges represent 4.91% of Company X’s total electric bill of Rs.830888.85

    Company Y uses less electricity over the month: 10 kW per hour for 719 hours. However, they do use 100 kW for one hour every month to start up and bring their machines on line.

    Monthly energy usage is 7,190 kWh + 100 kWh = 7,290 kWh; At Rs.11 per kWh, Energy charges per month = Rs.80190 in energy charges; Demand charges = Rs. 38888.85; since  their maximum power requirement was also 100 kW—even though this peak power need is only for an incredibly small portion of the month.

    Here demand charges represent 48.49% of Company Y’s total electric bill of Rs.119078.85

    That’s huge!!!

    Believe no energy efficiency adjustments you can make immediately. To reduce your demand charges, get started by some necessary actions.

    • Disconnect non critical loads, on different time periods, and also avoid connecting loads simultaneously to reduce the instantaneous power.
    • Gain visibility to your energy data by real-time monitoring, which will show you when your demand for electricity is high and will allow you to change methods for cutting those peaks, also the demand charges.
    • Forecasting MD & load shedding if exceeding the contract demand (CD)

    Thus by real-time energy monitoring MD can be brought under control and avoid paying huge penalties which saves time, as well as the labor work required.

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