How To Reduce Peak Demand Charges

Posted by Gascat Dryers on Feb 8, 2019 6:07:56 PM
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Demand Charges: Gas Catalytic Drying vs Electric Infrared Drying

Energy Charges: Total electricity used monthly.

Demand Charges: Peak levels of electricity used monthly.

Calculating Demand Charges

To calculate demand charges, you look at the highest 15-minute average of peak levels recorded by the demand meter each month. If a great amount of power is used in shorter intervals, demand charges will be the primary contributor to your electric bill. However, if you use electricity at a smaller, more consistent rate, then your demand charges will be much smaller.

kW–Rate of electrical usage (Demand)

Example: Twenty 100-watt lamps use electricity at the rate of 2,000 watts (2 kilowatts / 2 kilowatts per hour)

kWh– Actual electrical energy used (Energy)

Example: Twenty 100-watt lamps turned on for one hour using 2-kilowatt hours per hour (kWh)

To put this in terms of horsepower, 1 HP uses 1-kilowatt hour per hour (kW).

The Purpose Of Demand Charges

When it comes to your utilities, demand charges cover the fixed costs when supplying specific energy levels to customers. Energy costs make up the variable-costs portion and are measured by kWh. However, utilities are required to maintain a high enough capacity to cover a wide range of energy needs for every customer at once. In order to maintain the levels of energy required, utilities have a variety of substations, wires, transformers, and generating stations on standby at power plants. Because of how expensive this is, demand charges assist in paying for it all. Beyond that, demand charges support the reduction of power usage at peak hours and shit it to non-peak hours by customers. By doing so, utilities can provide customers with variable loads of higher charges and help consistent-load customers save.

Paying Demand Charges

Customers in the commercial or industrial fields pay time-of-use rates for demand charges at specifically sized bills. After a customer reaches a specific level of demand charges on a consistent basis (typically 2000 kilowatt-hours each month over four consecutive months). After a customer is billed for demand charges, it continues until their monthly electrical use has consistently gone down (must be lower than 2000 kilowatt-hours each month for a total of twelve straight months). Every state in the United States has variable demand charges by state. However, they also are impacted by the season– meaning demand charges in the summer are more costly than those in the winter.

Example 1: Let’s say you have an industrial building with cooling, lighting, electrical equipment, and various machinery. With everything fully installed, the total load comes out to about 15 kW. However, let’s also say the building is not being used and there are no employees. Each month, you come in only one day and turn every single thing on for 15 minutes. Once the 15 minutes are up, you then turn everything off again, lock everything up, and do the same thing again the following month.

In this scenario, your energy consumption would be extremely low (costing roughly 28 cents at 4 kWh on top of the National Grid’s $47.25 service charge for electric, gas maintenance, meter reading, and billing per 30-day period with a cost total of $47.53).

On the other hand, the demand charge has an average cost of $8.32 per kW. If the meter reading is at 15 kWh, then the demand charge would be $124.80.

Basic Service Charge / Electrical Consumption: $47.53

Electrical Demand of 15 kWh: $124.80

Total Amount Due: $172.33

Example 2: A demand meter is much like your car’s speedometer. As you speed up in your car, the needle moves up. However, the key difference between the two is that when a car stops, the needle moves back down. A demand meter goes up with energy usage, but once it reaches a new maximum height, it stays there until a meter reader comes in a resets it back to zero.

Let’s say your demand goes up to 50 kW and remains there for 15 minutes. It will remain there unless your demand increases past that level. If it eventually reaches 55 kW and remains there for another 15 minutes, then the needle will read 55 in comparison to the 50 it would have been prior. Even if you’re using energy below 55 kW, the meter will remain there until reset.

If you have a motor in the building that is 10 kW and another motor that is 15 kW both operating simultaneously, your meter will say 25 kW. However, if you use both motors at different times– only using the 15 kW unit when the 15 kW unit is off, then the maximum will be read as 15 kW. You would save $83 per month / $996 per year with the 10 kW motor.

Full Use: 25 kW = $208

Alternating Use: 10 kW or 15 kW = $125

Why You Should Care About Demand Charges

When it comes to industrial and commercial customers’ total electricity costs, demand charges are a large portion (roughly 30% – 70%). While energy prices in the United States are going down, demand charges are steadily increasing. This is because the grids are aging– requiring infrastructure updates and maintenance. The result is higher costs on the ratepayers. However, the growth of solar energy also plays a role. Solar power impacts it since cloud coverage can cause volatility between peak loads.

How To Save Energy And Control Demand

To control demand and save energy, you can implement time-clocks and manual controls to the units that automate a building’s electrical processes. For an industrial building, the energy demand may not even be a result of the electrical system. Rather, the building itself could impact it. Things, such as window design, tight construction with thermal-design in mind, and great ventilation systems can play big a big role in demand charges. If your building requires less heating and cooling, then you can install more efficient and cost-effective electrical equipment.

It’s important to note that if a business is listed as a Large General Service and has a measured demand of 100 kW (receiving a service less than 15,000 volts), then there will be a difference between the recorded demand on the reader, and what the billing demand is.

Example: During the winter a building has a maximum peak of 300 kW during just one month. Over the course of the next 11 months, their minimum demand per month will be 150 kW for billing purposes. This will be true even if the recorded demand is lower than 150 kW. The National Grid’s ratchet clause says that the minimum demand billing cannot be lower than half of the maximum demand recorded in the past 11 months.

Electric Infrared Drying Energy Usage

Electric infrared dryers are comprised of a finely coiled tungsten filament that is surrounded by halogen gas-filled lamp and high-purity tubular quartz glass. Electric infrared uses the transfer of radiation between a material that is a lower temperature and a hot element to produce heat.

The end result is a short wavelength that heats the paint and the metal beneath in a 65 – 90 minute period (at 30 kW multiple times a day).

Gas Catalytic Drying Energy Usage

Gas Catalytic Drying uses propane, methane, or a propane/butane mix to create an exothermic reaction (releasing energy through heat or light). It does so by having the gas interact with a catalyst composed of palladium oxide, zirconium, and platinum. The reaction itself creates a flame-less burning; however, it does not work the same way as typical burning since there is no source of ignition.

The end result is a medium wavelength that heats paint evenly throughout in a 16 – 30 minute period (at 8 kW once in the morning).

Gascat Dryers

Gascat Dryers provide you the best, fastest, most efficient, and cost-effective solutions on the market. We believe time is money. And with this advanced drying system, your business will reliably process more vehicles each and every day– all while saving you a ton of money on demand charges.


Let us help you save time and money by streamlining your paint drying processes. Contact us, today!

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