A demand charge is linked to how much power a business draws from the grid during certain peak periods, rather than only how many kilowatt-hours it uses. A battery may help in some cases by reducing short demand peaks, but the tariff and load profile need to be checked first.
Energy use and demand are different
Electricity consumption tells us how much energy a business uses over time. Demand tells us how much power the site needs at a particular moment or interval.
A business can have moderate total energy use but still create a sharp peak when several large loads operate together. Depending on the tariff, that peak can affect part of the bill.
Why a battery may help
If a predictable demand peak occurs when the battery has available charge, the battery may discharge during that period and reduce how much power is taken from the grid. This is often called peak shaving.
But the battery must have enough power output, enough stored energy and the right control strategy. A battery that is empty when the peak occurs may do little for the demand charge.
Why I need interval data
A normal bill may show that demand charges exist, but interval data can show when the peaks happen and how often they occur. That is important because one short peak can look very different from a business that runs near its maximum demand every day.
Solar can also affect demand
Solar may reduce grid demand during sunny operating hours. If the highest demand occurs while solar is producing strongly, solar alone may already reduce part of the problem. If the peak occurs later, a battery may be more relevant.
Simple example
A workshop normally draws 40 kW but briefly reaches 80 kW when several machines start together. If that peak drives a demand charge, I would look at when it occurs, how long it lasts and whether a battery can reliably reduce it. I would not assume the answer from the annual bill alone.
What I check before modelling demand savings
- The exact tariff and how demand is measured
- The highest demand periods and how often they occur
- Interval or smart-meter data
- Solar production at the time of the peaks
- Battery power output and usable capacity
- Other reasons for the battery, such as solar shifting or backup
Demand savings should not be guessed
Commercial battery proposals can look attractive when large demand savings are assumed. Those assumptions should be tied back to actual meter data and the tariff rules for the site.
If the demand opportunity is weak, the battery may still have value for other reasons. If those other benefits are also weak, solar-only or another approach may make more sense.
Want to check your commercial load profile?
Use the full calculator for a first estimate, or send a recent commercial power bill for a free full energy assessment. Interval data may be requested if demand charges are important.