BlogNov 12, 2020

What is Demand?

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Supplying a scenario:

You’re a property manager overseeing two buildings. You get the electric bills for both one day and quickly look them over before forwarding the bills on to AP. Something jumps out at you: Building A’s bill is substantially more than Building B’s. Even more puzzling, both buildings drew roughly the same amount of power over the previous month. So why is Building A’s bill so much more?

The answer comes as you scroll through the line items: Demand Charges. Not having time to dive into what this is or how it works, you assume this charge is another administrative line item and move on with your day.

Well, we’re here with the answers.

Demanding an answer:

Simply put, demand is the measurement of the maximum amount of power a building uses during any interval in the billing period. This interval is often just 15 minutes. The higher the maximum amount of power a customer demands in any one 15-minute interval, the higher the demand cost will be on their monthly bill.

Let’s visualize this with one of my favorite things: PIZZA. Let’s say you’re a pizzeria owner and you want to build a pizza oven that will fit the maximum number of pizzas you’ll need to bake at one time in order to meet your orders. You analyze the numbers over a week and realize that demand peaks on Friday nights – where you need to fit 20 pizzas in at a time to keep up. So you swallow the enormous cost and build a huge pizza oven. But suddenly this seems like a waste, because only on Friday nights for a brief period is an oven that big even necessary. You decide to pass this cost along to your customers by adding a “Friday night demand” charge to your pizza cost.

This is demand cost. Electricity suppliers must keep the generation and distribution capacity of their electric supply big enough to account for even abnormally large demand in electricity, otherwise the electric grid could be at risk of blackouts and further problems. Maintaining this infrastructure is expensive, especially when the full capacity is rarely needed. So electric companies pass along the cost to customers by charging additional fees for the largest capacity your building(s) demand at any one time.

Enough with the pizza. How do I address this?

The best way to analyze and address demand is to look at behavior. How is your building using electricity and when? Demand charges exist to incentivize customers to spread out their energy usage over time where possible, but to know where and how, you’ll need to visualize your demand costs and analyze them versus changes in behavior.

Remember, solutions that reduce overall consumption may not necessarily be effective at limiting power demand. Our two buildings in the example above drew the same amount of power over a month, but one had significantly higher demand cost because of when and to what magnitude it used power.

Just like with everything else – you can’t change what you don’t measure.

To help customers address demand, EnergyPrint has newly incorporated demand tracking into the Utility Dashboard. Now customers can see how both demand and demand cost change over time. With this new data, you can start to identify trends in your building’s behavior that may lead to an effective solution to lower your demand charges.

With demand tracking, you can visualize demand over months and seasons to understand where peak demand is highest, understand how much of your bill goes toward peak demand consumption, and identify strategies to maximize your demand rate structure. You can even compare your peak demand and demand cost to your other buildings on the Utility Dashboard!

Demand can be confusing, but it isn’t impossible to address. And it all starts with solid data in the Utility Dashboard.

  • The demand is real. Many clients may see demand charges take up over 50 percent of their total electric bill.

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