Our energy bills are as certain as death and taxes but do we understand them and can we reduce them?
Breaking down our electricity bill, most of the charges no matter where you live and who your retailer is will fall into two categories
The first is consumption which most people understand. This is the energy we have used to run our appliances, our TVs, our lights, and anything else you can think of which is pretty simple.
The second being demand charges really isn’t that simple
Under Demand charges see terms like Transmission and Distribution not to mention local access fees or customer service charges. Most people I have spoken with understand these as fixed charges that are the same every month or that while they change the consumer has no control of them.
Now while the consumer has no control over the math that has been agreed upon by regulators and wires service providers they do have some control over the numbers that go into that math formula, which is to say these charges are not fixed and our behavior, technology, and equipment all can impact these costs for the better or the worse.
Now depending on where you live, this math will be different so understanding this math or having someone like Solar Dev provide a no-cost assessment of your energy is worth your while.
First thing to understand would be your demand classification, your wire service provider which is the company that owns the power lines that feed your home and business will put you into different categories based on your peak demand.
Your peak demand for the month will be a key number in the math to determine both your transmission and distribution charges, but its also important to remember that in most cases the number that will be used is a minimum of 90 percent of your peak demand for the whole year. This is called ratcheted demand.
But what is peak demand?
your peak demand is the most energy you consume all at once. So if you consumed 24 kWh’s in day and your power consumption was even for every hour of the day, your peak would be 1 kW. But if you consumed all of that energy in 1 hour your peak demand would be 24 kW. Important to note this doesn’t add to the next day all month. Its the peak so if you use 24 kW one hour and 10 kW every other hour of the month your peak demand is 24 kW.
Now for energy nerds like me this is really interesting but for business owners reading this they are thinking ‘So what? My staff needs to perform the work they need to perform when they need to perform it’.
And they would be right. But are there practical options?
It’s not like you want your staff to rotate working in the dark or anything along those lines.
When we look at demand classifications or categories we see businesses organized this way so the wire service provider can charge the larger consumers more, as they are taking up more of their infrastructure. The classifications depending where you live can be up 50 kVA, 50 to 150 kVA and 150 to 500 kVA
These categories are all charged differently with math that isn’t that simple but when you are in a 150 to 500 kVa category for example but you spend very little time of the entire year above 150 (surprising how many businesses I am describing) then an investment in LED lighting, Solar microgeneration, HVAC automation can have much higher returns than they normally would have.
We look at interval data to complete our energy assessments. When we walk through a building and see the potential energy investments and their expected return, that all changes when we see the opportunity to shift our client to lower demand classification.
While every building and customer is different a solar installation with a payback period of 6 years could be as little 4 years if you are able to lower your demand classification.
Why not have us take a look