A capital-free way to reduce your energy bill: target demand-based charges

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As I work with industrial end users to help them mitigate and manage their energy spend, there’s a natural tendency for the operational personnel to focus on reducing CONSUMPTION as a priority…that is, to minimize energy costs by reducing the number of kilowatt hours (KWh) consumed.  For many energy markets, however, the DEMAND-based charges (baed on KW) form a major component of the energy invoice –up to 40-50% of the total invoice– that is often overlooked.

There’s a lot that can be done to reduce demand-based charges, often with little or no capital costs….and the DATA to figure out what might be done can usually be obtained for chump change ($35-$50, or even free).interval plot energy Industrial automation


Interval data, which can be obtained from the utility for a particular meter, reveals a lot about the demand profile of an industrial site.  A simple plot of the data, which can easily be done in Excel, provides key information about WHEN the highest demand levels are reached and implies what may be done to reduce the charges-for example:

-is the peak consistently reached at the beginning of a shift or workday?  This could be caused by multiple motors being turned on at the same time

-is the peak reached at seemingly random points in the day a few times per week, within an asynchronous operation?  This is often caused by air or HVAC compressors cycling on at the same time, during the coincidental operation of high-consumption production equipment.

The two example observations above highlight problems which may be solved by either changing startup sequences within production equipment, or interlocking compressor cycles with high-consumption equipment.  Neither of these solutions require significant capital appropriation, nor limits on production throughput–the ideal characteristics of the “Low Hanging Fruit” of an Energy Management program.

Your first three steps are as follows:

#1 – Check your energy invoice, and circle the charges that are based on KW: how large of a portion of the total invoices are these charges?  Some invoices won’t reflect any such charges…if it’s less than 20%, you may not consider this pursuit worthwhile.  Anything over 25%, you probably want to go to step 2

#2 – Order 12 months of interval data from your utility…start with the utility’s website…ordering procedures are usually well explained, sometimes just a couple of clicks or a phone call.

#3 – Plot the data using Excel, and note when your peaks occur, especially in relation to your production cycle.

What does your data tell you about your demand?   Once you have your Excel plot in-hand, shoot me an email, let’s look at it together and come up with some ideas (my email is within my bio…just click on my picture at the top of the screen).


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  • Jim Taufer

    10 years ago

    Great recommendation given the need for reducing costs. Also, “shadow metering” the utility meter and sub-metering large loads can also reveal opportunities to better manage energy and reduce spend.

    • Good point! In rare cases for industrial clients (and what is more often the case with commercial clients), the utility meter does not have interval recording capability, or the utility has no way to store and report this interval data….in these cases, a site level “Shadow” meter is imperative as a first step.

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