Commercial demand charges bill your highest power spike—not total energy use. This guide walks through the commercial demand charge calculator: peak kW from interval data or equipment totals, $/kW from your tariff rider, and monthly plus annual demand line items.
Benefits
- Simple formula: monthly demand charge = peak kW × $/kW.
- Annual line scales monthly demand cost for budgeting and peak-shaving ROI.
- Isolates demand billing from energy kWh charges—two separate bill components.
How it works
- Find billing peak kW from your utility interval report or demand meter.
- Enter the demand charge rate ($/kW) from your commercial tariff schedule.
- Read monthly demand charge and annual total—the adder on top of energy costs.
FAQ
How do I calculate a commercial demand charge?
Monthly demand charge ≈ peak kW × $/kW. Example: 85 kW billing peak × $12/kW → $1,020/mo demand charge (~$12,240/yr). One 15-minute interval during the month often sets that peak—equipment startups and HVAC staging matter.
What is the difference between demand charges and energy charges?
Energy charges bill kWh consumed over time. Demand charges bill the highest kW power draw in a billing window—capacity you needed from the grid at once. A efficient site with a short spike can pay more demand than a steady lower peak with the same monthly kWh.
How can I lower commercial demand charges?
Stagger motor and HVAC startups, shed non-critical load during peaks, add battery peak shaving, or upgrade to variable-frequency drives. Each kW removed from the billing peak saves $/kW every month—rerun the calculator with a lower kW target to see dollars.
Technical specifications
- Monthly demand $ = peak_kW × demand_charge_per_kW.
- Annual demand $ ≈ monthly_demand × 12.
- Billing peak is usually the highest 15-min average kW in the cycle.
- Related: demand-charge-calculator, tou-shifting-savings, peak-shaving-potential.
One spike sets the month
Demand tariffs punish the tallest 15-minute power pulse, not average use. A bakery oven preheat overlapping AC compressor start can print 90 kW once—and that number rides the whole billing cycle. Interval meter exports beat guessing from nameplate amps when you negotiate peak shaving.
Demand dollars are linear in kW
At $12/kW, every 5 kW trimmed from the billing peak saves $60/month ($720/year) before energy kWh math changes. That linearity is why batteries and load controllers target kW, while TOU shifting targets kWh. Run both calculators when your tariff has energy and demand riders.
Ratchet clauses can extend the pain
Some utilities apply annual or seasonal ratchets—a summer peak sets a demand floor for months. This tool models the current-cycle peak × rate; check your rider for minimum billing demand rules. A one-month spike under a ratchet tariff hurts longer than a single calculator line shows.