Understanding when peak demand is in your region can help you craft an effective energy strategy. 

Peak Demand Meaning 

When an electrical grid experiences peak demand, this is when electrical power demand is the highest over a given period. Every grid experiences a period of peak demand every day, week, month, and year. The moment of peak demand depends on the window you’re assessing. 

Peak demand is the level of capacity necessary during the precise moment when the grid experiences its highest demand for power. The typical peak demand for the year for an electrical grid in the U.S. occurs on a hot summer weekday in the late afternoon.  

For example, the classic peak demand occurs a couple of days into a heat wave in July, when people who work nine-to-five jobs are at work and running their air conditioning. AC units are some of the most energy-intensive appliances widely available, so peak demand typically occurs during summer, not winter. 

How Do You Measure Peak Demand? 

Electricity comprises both demand, which is measured in watts, and consumption, which is measured in watt-hours. This is important because utilities typically charge customers based on consumption — how much energy they use — and the watts necessary to generate and transmit to supply an entire grid when demand is highest.  

When and Why Peak Demand Occurs 

Let’s look at three facets of peak demand to explain when and why it happens: 

• Seasonal and weather: While heat generation can occur in different ways, such as through steam radiators, geothermal energy, and insulation and construction designed to preserve heat, cooling usually requires electric energy via fans and ACs. This is why the hottest days often coincide with peak demand. 

• Time of day patterns: Not only is the afternoon the hottest time of day, it’s also when most people are active, using computers, work machinery, and home appliances. This makes an afternoon in July the most probable time to experience the peak hour of demand for an electrical grid’s entire year. 

• Regional factors: Different locations have different weather patterns and populations that may have different routines. This can affect when peak demand occurs. 

Why Peak Demand Matters 

Peak demand matters to utilities and grid operators. They want to ensure they have a reliable power grid that can support people even when demand is at its highest. 

They have many tools to do this. Some of which make understanding peak demand important for customers, too. Because energy is a commodity, utility companies have devised ways to get end users to help with grid stability. 

One strategy is demand-side energy management. We’ll discuss this later, but these strategies actually offer some clients a source of revenue.  

Utilities also use peak demand to calculate peak load contribution (PLC). These costs may account for up to 30% of an individual’s or organization’s energy bill. The regional transmission organization, Pennsylvania-New Jersey-Maryland (PJM) Interconnection issues five coincident peaks. These are the five highest peak demand hours across PJM’s entire region during the year. The utility then uses these five peaks to determine a customer’s PLC. The average of the five peaks plus a combination of system- and zone-specific scaling factors comprise a customer’s peak load obligation.  

How To Manage and Reduce Peak Demand 

Here are seven steps businesses, organizations, and (to a degree) even individual homeowners can do to reduce their energy consumption during times of peak demand: 

1. Work With an Energy Consultant 

The first thing to understand is that it’s always easier to work with an expert. Energy consultancy terms can help you understand the specifics of peak energy demand and electricity costs in your region. Energy consultants could help you bring down your peak demand charge or even benefit from peak demand reduction or through a demand response program. Consultants can also conduct an energy audit for you.  

2. Conduct an Energy Audit 

An energy audit can reveal useful insights into your power consumption. This information is necessary to understand how your building or business consumes energy in comparison with the general high demand of the grid. 

3. Shift Processes to Off-Peak Hours 

With this information, you can learn when the peak demand period is and switch up energy-intensive processes. By consuming less electricity when demand is highest, you can avoid the highest charges and might even benefit from a demand-side management program. 

4. Install Smart Devices 

Smart devices that are more efficient or that can automatically switch off during peak times can save you a lot of money. Energy efficiency is an effective way for many buildings and organizations to bring down costs. 

5. Implement Demand Response Programs 

By participating in a demand response program, you can voluntarily agree to use less energy during peak periods in exchange for lower costs or even payments from the utility. This might mean halting production, utilizing a flexible schedule, or switching to an on-site generator while the grid is stressed. 

For businesses, a new revenue stream can be a vital lifeline, or simply a nice boost to the bottom line. Either way, it’s something worth considering. By participating in a demand response program, organizations can actually earn money by going off the grid when demand peaks. Utilities typically make annual payments based on each megawatt-hour. This can more than make up for money spent on gas generators and/or solar panels and batteries, helping businesses maintain or increase profitability.  

6. Leverage Battery Storage 

With a battery, you can also access its energy during peak periods. 

7. Integrate Renewable Energy 

You don’t have to keep a gas generator on-site; you can also benefit from solar panels, which can supply that aforementioned battery. You can also ask your energy consultant to source local renewable energy projects to provide cheap supplemental energy. 

The Role of Energy Demand Management Services 

An energy procurement partner can help your organization navigate the complexities of peak demand and maybe even craft a strategy to use this as an asset. 

Ready to optimize your energy usage during peak demand? Get in touch with EnerConnex to discover how an energy demand management strategy can work for your organization.