Bill anatomy
Demand charges and time-of-use arbitrage
A commercial bill is not one number. It is energy in kilowatt hours, demand in kilowatts, and a time-of-use schedule that decides what each hour is worth. Getting solar wrong here is almost always a failure to read the second half.
- Energy charge
- $ per kWh
- Demand charge
- $ per kW
- Measured over
- 15-minute average
- What reaches it
- Storage and load control
Demand charges and time of use
Model it against your own numbers
Energy charges are billed per kilowatt hour for what you used. Demand charges are billed per kilowatt against your single highest 15-minute average in the month. An array cuts kWh reliably. Only storage or load control reliably cuts kW.
Modelled monthly effect
Energy charge saved
All 81,000 kWh generated is consumed on site
$15,147
Exported energy credited
0 kWh exported at $0.048
$0
Peak demand charge saved
250 kW shaved for 2.0 hours
$5,600
Time-of-use arbitrage
500 kWh shifted on 21 weekdays
$1,573
Total modelled monthly saving
$22,320
About $267,840 a year, before escalation.
Where the saving comes from
- Energy (kWh)
- Demand (kW)
- Arbitrage
Sample time-of-use periods
| Period | Window | Season | $ per kWh |
|---|---|---|---|
| Summer peak | 4:00pm - 9:00pm weekdays | Jun - Sep | $0.312 |
| Summer part-peak | 2:00pm - 4:00pm and 9:00pm - 11:00pm | Jun - Sep | $0.218 |
| Summer off-peak | All other hours | Jun - Sep | $0.146 |
| Winter peak | 4:00pm - 9:00pm weekdays | Oct - May | $0.201 |
| Winter off-peak | All other hours | Oct - May | $0.132 |
Sample demand charges
| Charge | Measured against | $ per kW |
|---|---|---|
| Maximum peak demand | Highest 15-minute average kW inside the 4pm to 9pm summer window | $22.40 |
| Maximum part-peak demand | Highest 15-minute average kW inside the part-peak windows | $6.10 |
| Non-coincident demand | Highest 15-minute average kW at any time in the month | $19.80 |
A typical commercial bill, decomposed
Energy charges
41%
kWh consumed, priced by time-of-use period
Solar generation, consumed on site
Demand charges
38%
Dollars per kW against the month's highest 15-minute demand
Storage discharge and load control
Non-coincident demand
12%
Highest demand at any hour, including overnight
Load sequencing and storage
Fixed and service
6%
Meter, service and customer charges
Nothing. These stay.
Taxes and surcharges
3%
State and local, applied to the rest
Falls with the bill it sits on
Sample decomposition of a cold storage account on a commercial demand tariff.
The unit that trips everyone up
kW is a rate. kWh is a quantity.
A kilowatt is how fast energy is flowing right now, like the speed on a dashboard. A kilowatt hour is how much has flowed over a period, like the miles on the odometer. A 100 kW load running for three hours consumes 300 kWh, and so does a 300 kW load running for one hour.
Your utility bills both, separately. Energy charges are priced per kilowatt hour and vary by time-of-use period. Demand charges are priced per kilowatt against a single 15-minute average, and they do not care how briefly that average occurred.
This is why we refuse to size a system from an annual kilowatt hour total. That total tells you nothing about when the energy was used, and on a commercial tariff when is half the answer.
What each tool can reach
- Solar reaches energy charges. Every kWh generated and consumed on site is a kWh you do not buy at the retail rate.
- Storage reaches demand charges. Discharging into the peak flattens the 15-minute average that sets the bill.
- Storage also reaches the tariff spread. Charge at the off-peak rate, discharge at the peak rate, every weekday.
- Load control reaches both, for nothing. Sequencing two compressors so they never start together is a control change, not a purchase.
Answers
Demand charges: questions
Not covered here? Our engineers answer directly, not through a call centre.
Ask a question(661) 555-0183A charge in dollars per kilowatt, billed against the highest 15-minute average demand recorded on your meter during the billing period. It pays for the capacity the utility had to hold available for your worst moment, so it is charged even if that moment lasted a quarter of an hour.
Because your peak may not happen while the sun is up. A 7:30pm peak on a hot evening is completely untouched by an array of any size. Solar reduces the kilowatt hours you buy; it does not reliably reduce the kilowatts you demand.
The highest demand at any hour of the month, regardless of time-of-use period. It is billed separately from the peak-window demand charge, and because it can be set at three in the morning it is the hardest one to attack with generation alone.
No. If your peak is a short sharp spike, you need battery power in kW. If it is a long plateau, you need battery energy in kWh. And if the peak is caused by two machines starting together, a control interlock costs a fraction of a battery and does the same job.
Interval data. Your utility already records your demand in 15-minute intervals and will release twelve months of it. We attribute the peak events to equipment during the site walk, which is usually the single most useful half day of the whole project.
Send us twelve bills and we will show you the second half
The bill decomposition is free and it takes about a week. Most facilities have never seen their own load shape.
CSLB #1071482 (sample). Prevailing wage on public works. Engineers answer, not a call centre.