Ask Renewable Rayna – What is Peak Demand?



The scorching heat has been in full force this summer. It’s critical to understand that weather has an impact on your electric bill! A few hot days can have a considerable influence on your cost, especially if they occur during the same billing period. To begin, let’s define what this occurrence is: Peak Demand.

Peak Demand is simply the most energy consumed at any given demand interval within the billing month. Most utilities use a 15-minute demand interval, giving customers roughly 3,000 chances each month to identify their peak consumption. The ONE 15-MINUTE period with the highest energy use will determine the peak demand for the full billing month.

Electricity demand fluctuates. It can alter in a single day, a week, or a year. In the morning and evening, people use a lot of electricity. When they are at school or at work, they use less. On weekends, they also consume less. Air conditioners use a lot more energy throughout the summer. Heaters use a lot more energy in the winter. Both of these run much less frequently in the spring and fall.

Energy usage graphs can help you understand electricity demand. The big upward spikes show peak demand.



These graphs show typical energy demands for summer and winter. In summer there is one peak in the late afternoon and early evening. In winter there are two peaks-one in the morning and one in the evening (Source: Let’s Talk Science based on an image by Vencorp via the World Nuclear Association).
These graphs show typical energy demands for summer and winter. In summer there is one peak in the late afternoon and early evening. In winter there are two peaks-one in the morning and one in the evening (Source: Let’s Talk Science based on an image by Vencorp via the World Nuclear Association).


These graphs show typical energy demands for summer and winter. In summer there is one peak in the late afternoon and early evening. In winter there are two peaks-one in the morning and one in the evening (Source: Let’s Talk Science based on an image by Vencorp via the World Nuclear Association).


As can be seen, the problem for demand-rate clients, such as businesses, schools, farms, and even utilities, is to spread out their energy usage so that there are no substantial “peaks” during just a few demand intervals. The goal is to prevent being charged a rate that solely represents one high rate of consumption, rather than a rate that reflects overall consumption.



Even for non-demand paying customers, such as residential customers, each customer’s contribution to the total peak demand of the electric grid is a substantial component of energy prices. The greater an energy user’s contribution to that peak – which frequently occurs during the summer – the higher the price imposed on consumers’ monthly bills in the following planning year. Peak demand denotes the time when the most electricity is consumed. This occurs more frequently in the morning and evening. People require a great amount of electrical energy when they wake up. They turn on the lights. They turn on the heating and cooling systems. They enjoy showering. They are preparing breakfast. People also make extensive use of electrification when they get home from school or work, turning on lights, heating and cooling systems, and cooking meals.

Though our home lighting may not require much electricity, when thousands of people turn on their lights at the same time, it can result in a significant increase in electricity usage! All of that energy has to come from somewhere.

Historically, demand has been treated as a given, and utilities have been responsible for ensuring that demand is met by constructing sufficient generating and transmission capacity geared to meet peak demand for a few hours each year.



Alternatively, as renewable energy has increased in popularity, numerous utilities have sought to supplement their wholesale power demands with distributed resources such as solar electricity. Unfortunately, grid operators cannot increase renewable energy production in response to a rise in demand — renewable energy can only be predicted, and you have no control over when the sun shines and the wind blows. This means that storing energy (through batteries) and adjusting demand to better correspond with production will become increasingly important.