Industrial Utility Efficiency    

Seven Sustainability Projects: Demand Control

Seven Key Sustainability Projects

1. Metering 5. Lighting
2. Demand Control 6. Heat Recovery
3. HVAC Optimization 7. Project Implementation
4. Compressed Air



Reducing energy costs and pollution emissions involves many areas within an industrial facility. My studies have found 7 key (or common) areas where low cost practical projects can be implemented. Combined, these projects provide savings exceeding 10% of the annual energy spend with an average payback of less than one year.

This month’s article will focus on Demand Control. Electricity for most industrial facilities has two or more costs. First there is the energy cost which is measured as kilowatt hours (kWh) and then there is the demand cost measured at kilowatts (kW). Understanding the costs of these two units and also how the time of use is related is an important part of managing your energy costs. The utility term for this is Tariff Rate Schedule.

Demand Control Project Objectives

We can describe our demand control project as an effort to reduce the cost of energy by minimizing the use of electricity during the peak demand periods. Symptoms which can help identify the opportunity for a demand control project include:

  1. The tariff schedule shows a demand charge and energy charge.
  2. The facility has equipment loads which operate less than 24 hours per day.
  3. The electric load profile shows demand peaks.
  4. There are equipment loads which can be interrupted for period of >15 minutes.

Step #1: Gather Data

To begin an effective Demand Control project some data needs to be gathered. First, you will need to know the Tariff Rate Schedule. This can be achieved from your utility bill, local utility representative, or it is often posted on the utility websites.

  Figure 1: Tariff Table    

From this table we can see that though the cost of electricity is $0.102/kWh the energy cost portion is between $0.082 and $0.066 depending on the time of day the energy is used. Also the demand portion of the energy cost is $12.00 per kW. This is the part we will focus on for this project.

Step #2: Understand the Demand Charge

A demand charge of $12.00 per kW means that the utility company measures the electricity usage every 15 minutes for the whole month. The peak energy use of the month is called the demand and is multiplied by the $12.00 to determine the demand charge.

A demand profile as shown in figure 2 shows the 15 minute electric readings in the form of a graph. From this graph we can see the peak demand was 1,720 kW. This data is usually available directly from the utility company. Some utilities provide this without charge and others with a small charge per month will give you access to see this type of detailed data from your computer.

1,720 kW x $12.00 per kW = $20,640. The total electric bill was $76,512. The demand cost was 27% of the total cost! Every kW that we can reduce from this peak is worth $12.00 for each month or $144.00 per year.

Looking closely at the graph we can see that the peak occurs mid day and lasts approximately 1.5 hours. If we could reduce this peak to a maximum of 1,600 kW we could reduce our demand by 120 kW. 120 kW x $12.00/kW x 12 months per year = $17,280 per year. This is almost 2% of our total electric spend.

  Figure 2: Interval Data    

Step #3: Reduce Peak Demand by Peak Shaving and/or Load Shifting

Reducing the peak demand is often referred to as Peak Shaving or Load Shifting. The next step is to determine which pieces of equipment are causing this peak to occur. I have found that using electronic data loggers is a good way to find the guilty equipment and to have measured data to support the project.

Identify major electric-using equipment that does not run 24 hours per day. Install a data logger on the devices and record the energy usage for a period of one week. Especially look for “batch” type processes. They may only be run a few times per day or week. These are often the guilty component to causing extra peak demand charges.

  Figure 3 : The data logger is installed in the equipment power cabinet    

Once data loggers are installed, one can get a picture of when different pieces of equipment are operating and how it relates to over-all demand charges. Figure 4 shows the results of four pieces of equipment and the results are aligned with the total electric profile for the plant. The shaded bar shows the peak period when electricity is most expensive. In this example we found a few pieces of equipment that with only a few hour changes in the operating schedule could reduce the demand charge significantly. The idea is to operate equipment outside of the peak demand period. In the beginning, the operations manager did not want to consider changing equipment schedules. After being presented with a clear graph and the dollar value he changed the equipment schedules.

  Figure 4: Equipment Load Profiles    

Step #4: Demand Shaving

Another method is referred to as Demand Shaving. The idea is to find equipment which could be shut off or slowed down for a short period of time when a peak period is approaching. The type of equipment that is usually shut down or slowed down includes hot water heaters, cooling tower fans, electric ovens, and air conditioning systems.

The chart in Figure 5 shows the change in the electric profile that can be accomplished by using a demand shaving control system. The left side of the chart shows the load profile with the control system off and the right side shows the control system on.

  Figure 5: Demand Controller Results    

Demand Shaving often requires that some automatic equipment be installed which monitors the actual energy usage and is programmed with a set of rules to determine which equipment can be shut down or slowed down and for how long. An example of a company to review is

There is another advantage to being able to perform demand shaving. Many locations in the country will pay large amounts of money to reduce your load during periods or peak demand for the utility company. Companies have formed Demand Response organizations. Often factories can receive more than $100 per kW for short period reductions in load. An example of a company that performs this service is


In summary, electricity costs different amounts depending on the time of day you use it. Moving equipment to operate during the periods of lower cost can save a lot of money. Interval data is key to understanding the situation, followed by measuring the load profiles of individual pieces of equipment.


Thomas Mort is the Chief Operating Officer of Mission Point Energy.

To read the next six Sustainability Projects from this series please make your selection below:


HVAC Optimization

Project Implementation

Lighting Optimization

Heat Recovery

Air Compressors