About Peak Demand

Understanding Peak Demand

Energy costs for large commercial buildings can vary widely based on when the energy is consumed. Due to the complexity in energy pricing, operators of two identical buildings in the same city can consume the same amount of energy over the course of a month, yet pay substantially different amounts for that energy. 

Why? This is due in large part to what utility companies refer to as “peak demand.” When calculating energy bills for large commercial buildings, utilities take into account both their fuel costs to generate the electricity, as well as the storage capacity required over time to meet demand. By nature, large commercial office buildings can exhibit pronounced demand peaks over the course of a day, a month and a year. Utilities incorporate into commercial energy bills the storage-capacity costs required to ensure they have enough energy on hand to meet these peaks in demand over time. This “demand charge” can make up a significant portion of a commercial energy bill. Buildings that exhibit a significantly higher energy load during the day – when the sun is shining, offices are occupied, rooftop HVAC units are running at full capacity and office equipment is being used – versus nighttime, when the outside temperature is cooler and offices are unoccupied, face substantially higher demand costs in their energy bills.

Utility companies can either build additional generation plants and storage capacity to meet demand, or motivate building operators to employ means of reducing peak demand. Since the costs associated with developing additional power plants and adding storage capacity are significant, building operators are offered the opportunity to reduce their energy bill by reducing their peak demand.

Federal programs, such as the U.S. Green Building Counsel (USGBG) Leadership in Energy and Environmental Design (LEED) certification standards also offer incentives in the form of state and local tax breaks to builders and building operators whose facilities meet stringent requirements with regard to building materials and mechanical systems, among other elements.

In addition, building automation systems, combined with cutting-edge technology, such as QCoefficient’s Foresight eMeister service are using computer algorithms to determine the most efficient time to cool a building based on weather data and the building’s construction characteristics, which chillers in the building’s system operate most efficiently and how much to cool the building such that the building’s drywall and concrete surface area can serve as a means of thermal energy storage, slowly releasing during the day and allowing the building to use less energy to stay within a target temperature range during high-cost peak-demand daytime hours, reducing peak demand and reducing monthly utility bill demand charges. 

Buildings like 77 West Wacker Drive in Chicago are using new technologies to reduce daytime peak energy demand.

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