Did you know that your capacity charges, which account for nearly 25% of your total electricity supply costs, are determined by your peak load (or peak demand) during a select few hours each year? Your peak load is your highest consumption of energy over a specified time period, as opposed to your usage (i.e. how much total energy you use over a specified time period). The figure below is an example of your peak load over a single day.
What Are Capacity Charges & Why Do You Pay Them?
Your region’s electricity grid is responsible for making sure that electricity gets delivered to the end-user from suppliers at all times. However, we all know that during the hot summer months, there is a LOT more demand for electricity as people are pumping HVAC systems to keep their homes, offices, and other buildings cool. Capacity charges ensure there is adequate energy generation capacity (hence the name: capacity) to supply electricity during the highest levels of grid demand. Your specific capacity charges are based on your highest energy demand during a select few hours each year. Capacity charges essentially serve as insurance to ensure the grid always has enough power.
How Does it Work?
These select few hours that determine your capacity charges are unknown in advance and difficult to predict; however, almost all regions fall between the months of June – September. These hours are determined sometime after September when your local utility will look back at the months between June – September and determine which days had the highest levels of demand on the grid. Your capacity charges for the following year are then determined by your peak load during these peak hours. Each power region determines these slightly differently. Please see the figure below to understand your region’s specific method:
Why Should You Care?
If you can curtail your energy usage in your facilities during the peak hours, your peak load will be lower, resulting in lower capacity charges, and ultimately lower energy costs the following year. Contact Sunlight Energy Group to see how we can help you get out ahead of your capacity charges and stay informed on potential peak days!
How to reduce your energy usage during peak hours?
