Reducing peak demand as electrical consumption patterns change

Proliferation of electric vehicles and other rechargeable devices can create new peak demand patterns. Planning and renewable sources can mitigate the effects.

By Ray Strods July 16, 2013

It seems with all the emphasis placed on energy efficiency these days, most of the attention is given to reducing energy usage and little mindshare seems to be given to managing and reducing power demand, which can be just as costly. Believe it or not, a recent study by the EV Project shows that for commercial and industrial facilities, the average cost of peak power is roughly $10 per kW per month. This may not seem like a lot, but for a commercial or industrial facility, this can easily add up to charges in the tens of thousands of dollars a year, and in some areas can be up to 70% of the total electric utility bill. The reason this cost is so high is that utilities need to ensure there is enough distribution and generation capacity to meet this need. If there is not enough distribution infrastructure, the utility has to build new power lines and install new transformers, all of which have large capital costs. If there is not enough generation capacity, the utility needs to bring online less efficient power generation equipment—usually simple cycle natural gas peaker plants—that are more expensive to operate.

One emerging technology that is already having a large effect on peak demand is electric vehicles. An average electric passenger vehicle has an onboard charger around 6.6 kW while certain specialty cars can have upwards of 10 and 20 kW chargers. If you have a fleet of these cars, the peak demand from charging these can add up quickly. A facility for a shipping and logistics company recently found that trying to add 50 electric vehicles would cause the peak demand of the building to rise from 100 kW to over 430 kW if all the cars were charging at once! The drastic increase in peak demand would not only cause the facility’s utility bill to rise, but the utility was also going to charge the facility to upgrade the transformer that was servicing its building at a price of over $100,000. This problem doesn’t apply only to passenger vehicles. Many facilities are also exploring the conversion of fork truck equipment from propane to electric, and this can have a similar impact.

There are solutions to this problem, or any peak demand problem for that matter, that range from using old approaches like timers to more advanced technologies like PLCs (programmable logic controllers) that shift the load to other locations or control how many devices can be on at one time. Other approaches increase the energy available by adding renewable capacity such as a solar photovoltaic system.

Spreading out demand

Load control and shifting approaches for vehicle chargers can follow several basic strategies:

1. Charging stations with integrated delay features—A common utility billing pattern is to have a time-of-use rate that favors using electricity in the evening. Most businesses tend to have the highest demand peak in the middle of the day. Unfortunately, most businesses and factories are closed during the evenings and cars are plugged in as soon as people head home for the day around 5:00 p.m., before the lower rates take effect. This can create a peak around this time that eventually can end up costing those paying the bills extra money. If the extent of the situation isn’t too large, a simple solution can be adding a delay feature to the charging stations. This allows users to delay the charger going on until the time that lower rates come into effect.

2. Set up a time-based cycling program using a PLC—While charging stations with integrated delay features are usually an inexpensive solution, there is room for error in any situation where human intervention is required. If a user has to know to set a start time, it will be necessary to educate all those EV users on how to work around those demand charges, and unfortunately this information doesn’t always stick. Also, if everyone delays at one time for the same duration, we still create the peak, it’s just shifted to a better time. This is where automation can come to the rescue. By using a simple discrete automation controller we can cycle the charging stations so that only a set number of chargers are operating at once.

3. Integrate a power meter with demand capabilities into the PLC—Even after integrating a cycling program, we might still not be able verify that our peak demand is indeed lowered or by how much. What if our building’s demand fluctuates frequently and we want to better match the charging process to “fill in the valleys,” so to speak? This is where we take it to the next level and integrate some inexpensive power monitoring equipment. Now we can automate the charging process so that peak demand never crosses a certain threshold. We can also maximize the amount of time the vehicles are actually charging by making sure charging stations are not unnecessarily turned off like the previous model.

Using renewable sources

While the solutions discussed so far spread out consumption, they don’t do anything to increase available power. As alternative generating technologies evolve, such as photovoltaic (PV) cells, they have become more practical and cost effective for smaller deployments.

Solar PV installations convert sunlight energy directly into electricity. Such an installation can provide two benefits to a facility. First, it can generate electricity that translates into lower energy usage from the utility and a lower energy bill. The second and less discussed benefit is the ability to reduce peak demand. Solar PV systems are usually rated at peak power output with a common small commercial or industrial system in the 100 kW range. Since power output is determined by sunlight strength, the system cannot normally be depended on to put out that rated power at all hours of the day, but it can put out power consistently. Even when solar systems are shaded by clouds, many systems still put out some power, albeit at a much a lower level. So if we take our hypothetical 100 kW solar system and assume 25% of it will be effective in reducing peak demand, we have a reduction in demand of 25 kW, which can equate to $3,000 per year.

In certain situations, you need much higher than 25% certainty that the PV system will be able to offset the peak demand. If that is the case, you should consider looking into PV systems that combine some form of storage, often battery based, with a traditional solar inverter. In this situation, the solar inverter can pull power from the battery bank whenever the sun isn’t shining and still keep your overall building demand low. While storage can pose an added cost, you will probably not need the capacity to go completely off grid, so the cost might not be as large as you think. This requires a control system that is a bit more complex but if your peak demand situation is difficult to overcome by other means, this can be a useful tool to minimize the most expensive peaks.

Hopefully this introduction gave you some insight into the cost of peak demand and just how easy it can be to use some old technologies to limit peak demand of new technologies, and how to use new technologies to solve this very old problem.

Ray Strods is product manager, renewable energy products, for Siemens infrastructure & cities low and medium voltage division. Reach him at

Key concepts:

  • Changing energy consumption patterns can improve or hurt your energy costs.
  • While electric vehicles can save money, charging without demand management can increase utility costs.  


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