High-demand charges: How U.S. businesses could save money through energy storage

High-demand charges: How U.S. businesses could save money through energy storage

Millions of U.S. businesses could save money by storing energy, as this would lower the impact of the very common high demand charges that are often applied for commercial customers. This is the result of a recent study by NREL.

For years, utilities across the United States have been trying hard to impose high demand charges. These would be based on the peak usage and would be added to the customer’s bill. However, so far the solar industry has been able to fend this off, based upon the fact that these are hard for customers to understand and estimate.


Up to 5 million commercial customers in the U.S. affected

As a matter of fact, high demand charges are widely spread in the United States and sometimes even compulsory. The U.S. Department of Energy’s National Renewable Energy Laboratories (NREL) has run what it calls the first publicly available, comprehensive survey of demand charges across the United States. The result of the study, which was funded in part by the U.S. Department of Energy’s SunShot program, was that up to 5 million commercial customers across the U.S. are eligible for rates with demand charges above 15 USD per kW/h, which is the limit set by GTM Research.


Widely spread system

In most cases, utilities working with high-demand charges were located outside of California, albeit it has been the leading behind-the-meter storage combo. However, some amount of high demand charges could be found nearly anywhere in the U.S. Among them, the highest ones were found in California, New York City and Long Island, with over 30 USD per kW/h. But in other states, rates reached 20 USD per kW/h as well. New York, Georgia, Colorado and Michigan has the largest number of clients with demand-charge based rates.


Positive consequences

There is a series of consequences of high-demand charges. As the model of public regulation grants utilities a certain profit only, the high demand charges mean that they must ask for less in other cases. Also, “high demand charges are often cited as a critical factor in battery project economics,” the NREL explains. Besides that, lowering demand charges may be one of the main businesses of behind-the-meter energy storage, but it is not the only service provided, and most providers offer a selection of stackable services.


Title image: Petr Malinak/Shutterstock