Commercial demand-charge calculator
Estimate the bill value of lowering a facility’s billed peak. Enter the current peak, a realistic kW reduction, the utility demand rate, and the number of months affected.
Demand-reduction simulator
Estimate the bill value of sequencing loads, limiting chargers, using controls, or shaving peaks with storage.
What is a demand charge?
A demand charge is based on the highest average power draw measured during a utility-defined interval, often 15 or 30 minutes. It is different from the energy charge based on total kWh. A short period when several large loads operate together can therefore affect the bill even if monthly energy use barely changes.
The basic calculation
Estimated monthly value equals the avoided billed kW multiplied by the demand price in dollars per kW. For example, a 20 kW reduction at $18 per kW is worth about $360 for each month in which the lower peak changes the billed demand. Ratchets and coincident-peak rules can change the result.
Model a demand ratchet before trusting the savings
Some tariffs bill the greater of the current measured peak and a percentage of an earlier seasonal or annual peak. Enter that earlier peak and the tariff percentage in the calculator. If the resulting ratchet floor is above the new measured target, it limits the bill savings even when the physical peak is reduced.
For example, an earlier 250 kW peak with an 80% ratchet creates a 200 kW billing floor. A project that lowers the current measured peak to 170 kW may still be billed at 200 kW until the ratchet period expires.
Ways businesses reduce peaks
Common approaches include staggering motor starts, limiting simultaneous EV charging, pre-cooling outside the peak window, controlling refrigeration defrost cycles, and dispatching a battery. The practical opportunity depends on operating constraints and the exact tariff, so confirm the interval data before investing.
Check the full bill impact
Continue with the commercial electricity bill calculator to see demand savings alongside energy, fixed charges, taxes, and riders. For a deeper explanation, read how commercial demand charges work and the practical guide to reducing peak demand.