As commercial power users search for ways to lower their overhead, they seldom give the power bill consideration for improving their bottom line. The electrical utility must provide infrastructure to supply power during peak demand hours. Transformers, substations and generating stations. These are designed to provide the power needed during high demand cycles but are on standby most of the time. This constitutes a major expense in purchasing the machinery and the maintenance providing effective operation when needed. It may be standby power production but must operate at high reliability levels during peak power usage and the maintenance is expensive.
Power Demand Charges
The way the utilities recoup some of these expenses is ‘demand charges’ for commercial operations. These demand charges subsidize the standby capability of the company. The commercial power meter samples the power usage and the demand charges are based on the highest 15-minute average usage over a given month. If your company utilizes power management effectively and consistently maintains your power usage at or close to that level over the month, the demand charges will generally make a smaller portion of your electrical bill. Your bill is divided by kWh or kilowatt hours used and is charged so much per kWh, say in the 11-14 cents per kWh. But demand charges are more likely based on $8-10 dollars per kWh. You are charged at that rate for every kWh hour over your 15-minute peak consumption. Most commercial users pay between 10% demand charges or higher when it exceeds half your power bill is time to rethink how you’re using power and higher usage is a huge expense with little effective value to the commercial operation. Since peak usage is averaged across the month and power usage over the peak impacts the power bill disproportionally. Take a manufacturing company. They shut down for the weekends and then fire it up the next Monday. While down they conduct their maintenance and repair over the weekend. For 15 minutes each Monday you burn up over a 25 kWh for machinery startup four times a month for 100 kWh over peak, at $800 (100 kWh * $8.00 per kWh) That is a big bill that contributes nothing to the manufacturing process. The closer to the peak you run without going over the better your bottom line.
How to Reduce Demand Charges
One way to lower demand charges is to provide a diesel electric power wired in parallel with the grid while switching gear provides synchronization with the utilities power. Fire up the diesel before starting all those electric motors and let parallel power generation lower the power pulled from the grid. When you’re up and running shut down your generator and cruise along on grid power. Given the large dollars in demand charges the diesel generator could pay for itself in just a few years. It’s like you were your own peak demand substation. With the multifuel capabilities of the compression ignition engine, i.e. diesel you’re not confined to just diesel fuels. Another advantage is that the unit can act as a standby generator to keep your commercial enterprise humming in case of grid failure. Contact Environmental Power Solutions to rent, lease or buy a clean running diesel generator today.