Understanding and Better Managing Peak Load

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If you've looked at your energy bill lately and wondered, "What's 'peak load' mean?," we've got you covered. Read on for insight from our Director of Power Supply, Joe Haugen.

What is peak load?

Think of peak load as the highest period of demand on the power grid over a certain time frame. To reliably deliver power to all customers during peak load periods, power plants are guaranteed revenue through long-term capacity delivery auctions and, in return, those plants guarantee to operate on those days.

On peak days, utilities measure usage and identify individual customer consumption to quantify a customer's Peak Load Contribution (PLC). The PLC is used to determine the portion of capacity costs that each customer must pay.

What are peak days?

In order to control your business' PLC, you first have to understand what peak days are. Peak days are noted as the highest usage days of the year, and typically correlate to the hottest days of summer. Annual capacity costs are set by your electricity usage contribution to the peak hour during the peak day(s) from June through September, multiplied by the capacity auction clearing price. The amount of generation we have available to use all year is based on the few days when usage is highest, an effort that helps to prevent blackouts.

In some cases, commercial energy users may have significant energy needs during peak hours. But if possible, peak demand reduction strategies can be implemented to influence a customer's PLC. Some methods include peak usage shifting, peak shrinkage, and peak shaving.

How you can manage your organization's peak load

As mentioned, your PLC is a critical factor in determining your costs for the coming year, which is why understanding how to manage it should be a key component of your organization's energy strategy. Here are a few methods you can consider for your facility.

  1. Peak usage shifting: Significant peak demand can be attributed to organizations that have several heavy energy operations running concurrently. If possible, staggering these to run at different times, or better yet, during off-peak hours can make a big difference. In fact, a report from the U.S. Department of Energy found that up to 30 percent of a facility's energy consumption can be cut with the use of building controls or automation systems.
  2. Peak shrinking: If it makes sense for your business to do so, upgrading your company's systems and equipment to more energy-efficient models may help you reduce your PLC.
  3. Peak shaving: There are a variety of options when it comes to this approach. First, you can consider energy storage systems, such as batteries. This strategy allows you to pull power from the grid during off-peak periods for use when the grid is peaking. It can also be a good complement to another peak shaving approach — using onsite renewable energy. Going solar is a common option because solar generation is at its highest on hot summer days and there are a variety of ways to finance the system. Solar may be a good strategy for controlling your long-term energy costs while also protecting the sustainability of the planet. When paired with an energy storage solution like batteries, you can generate, store, and use electricity during peak times to manage your PLC.

Knowledge is Power

We believe that an educated customer is our best customer. It all starts with understanding how your business consumes energy. Work with your Account Manager to learn more about our Peak Load Notification Report or answer four simple questions to find out more about your organization's specific energy usage.

Questions to Ask Your Energy Supplier