Homes are billed for electricity based on the amount of energy they consume (measured in kwh). But commercial facilities often get an additional charge for the peak amount of power they consume during each month (measured in kw). These demand charges are designed to compensate the utility for the peak generating capacity that they must provide when large motors, air conditioners and other commercial processes are started up (power draw from motors is highest when the motors start).

For example, a medium commercial customer may pay a demand charge of $20 per kw based on the peak usage in any given 15 minute period during a month. So if they had several large industrial processes start while their air conditioning and lighting was also operating, they could experience a peak power draw of 200 kw -- and they would be billed for a $4,000 demand charge that month.

These demand charges can be dramatically reduced if large equipment is not started within the same 15 minute time period, and if other loads (such as air conditioning and EV charging) are temporarily shed (turned off). Demand charges can also be reduced if there is battery storage that can be quickly activated so that the spike of power is provided locally (by the customer's batteries) -- instead of by the utility.

Surprisingly, the fastest growing market for battery storage systems is for applications that reduce demand charges or provide other grid power support -- NOT to store daytime solar energy for night time use.

My guest on this week's Energy Show is Vic Shao, CEO of Green Charge Networks. They have developed software and control systems that sense when demand charges are reaching a peak (by measuring current draw on large circuits), and then activate a battery storage system to provide an alternative source of power so that the extra kw demand is not supplied (and billed) by the utility. Please Listen Up as Vic explains how commercial customers can reduce their electricity costs by combining battery storage and control systems to reduce demand charges.