Managing Demand & Power Factor
How utilities charge for demand, and practical steps to reduce it.
10 min read
Your electricity bill has two main charges: energy (kWh) and demand (kW). Managing demand is often a bigger lever than managing total kWh.
How demand charges work
Utilities measure your peak power draw in fixed intervals (usually 30 minutes). The highest 30-minute peak in the month sets your demand charge for that month.
If your peak is 100 kW in any 30-minute window, you're charged for 100 kW all month, even if you're usually at 50 kW.
Example: A 500 kW peak in January = ~£5,000–10,000/month depending on your contract. Cut the peak to 450 kW and you save ~£500–1,000/month.
Why this matters
A single event — all compressors or HVAC units starting simultaneously — can spike demand and cost you thousands for the whole billing period.
Practical demand-management tactics
- Load shifting — spread start-ups. Stagger boiler firing, start compressors one at a time, delay non-essential equipment.
- Reduce peak loads — turn off non-essential equipment during peak hours (typically 8am–8pm in summer).
- Improve power factor — reduces apparent power (kVA), which utilities sometimes charge for alongside kW.
- Energy storage — charge a thermal store or battery at off-peak, discharge at peak. Smooths the load.
Cost of implementing: £2,000–5,000 for controls to stagger loads. Savings: £5,000–20,000/year depending on your peak. Payback: often under 1 year.
Cutting peak demand by 10 kW saves ~£1,000/month. Cutting total energy by 10% (say, 5,000 kWh) saves ~£500/month at typical rates. Peak is more valuable.
Checking your bill
Look at:
- kWh used (bottom of the bill)
- Demand or kW peak (often labeled as "maximum demand" or "contracted capacity")
- Power factor charge (if you have one; it's often hidden as a % adjustment to kWh rates)
If your facility runs 24/7, demand management is less valuable (you're always at high load). If it's office hours only, demand spikes are common and very worth managing.