If I’m Getting Free Electricity from the Sun, Why isn’t my bill lower? It may be your demand peaks.

Nick Hein, 12/20/19

If you’re a commercial electric customer and you’ve just installed solar PV on your roof, you’re probably expecting to see a lower monthly electric bill.  If you don’t, it’s probably due to peak demand charges and there’s something you can do about it.  Electricity doesn’t always cost the same.  Depending what tariff schedule (rate plan) you’re on, the electric bill may have any or all of these components: 

When you install solar, you’re saving yourself money in the usage charge.  That means the utility is making less money, so they try to make up for it by increasing the connection charge and the demand charges.  Before solar, these charges didn’t even exist.  To some extent they are justified.   Connection charges cover the cost  to maintain wires and transformers that carry the electricity, and this rate is negotiated with the state Public Service Commission and can’t be changed.  Peak demand rates are also fixed, but you can reduce your peak usage.  When there are peaks the provider has to pay more for electricity on short notice.  It makes good sense to level out your usage so you don’t get peaks because it reduces the wear on your electrical equipment.  It can also save you money on your monthly bill.  Here’s how.

The peak demand charge is based on your highest energy use in any 15-minute period during the month.  Usually it is $10-20/kW depending on the time of day.  No matter how little electricity you use you’ll pay some of this charge, but if you can manage your usage so there aren’t spikes then you’ll avoid excessive charges.  You can probably find out your maximum peak demand in any given month by just looking at your bill.  Utilities will often tell you the amount, time and day that it occurred that month.  If you know what is happening at that time on that day it may tip you off to a change you can make.  When we noticed on a customer bill that it was occurring at 4pm,  we found out that the warehouse staff were plugging their electric forklifts in at that time every day to recharge.  By staggering charging times using timers (that had already been installed but weren’t being used) they eliminated that peak. 

If all you have to measure your peaks is the electric bill then you’ll only be able to eliminate one peak a month.  You’ll have to wait another month (or more) to see what the next peak is.  Instead we recommend a usage meter at your building that reports instantly, constantly and wirelessly to a remote app.  Then you can find and eliminate spikes anytime. 

Here are some tips for reducing peak demands. 

Conclusion: 

Leveling out your electric demand will reduce your bill, with the additional benefit of making it easier for your utility to provide the power you need more predictably.  The additional benefit to your business is that your equipment will last longer with fewer failures.  The most important tip is to have your solar or electrical contractor install a monitoring system that gives you up to the minute data to plan and monitor your usage.  Ideally the monitoring system should go in before you install solar.  By using data to get your usage down to an optimum level you’ll know with confidence what size your optimum solar array should be.