What is Peak Demand Management?
Key Takeaways
Managing energy usage during a few critical hours of the day can have an outsized impact on reducing energy costs
The easiest way to manage peak demand is with automation
When electricity demand spikes, so too does pricing. Grid operators use tariff structures like peak demand pricing, critical peak pricing, and critical peak rebates to send price signals to consumers that incentivize energy curtailment. Prices spike because of basic supply and demand; as more of something like energy is demanded, the supply struggles to keep up, raising the price.
To meet surging demand, grid operators turn to costly peaker plants that burn costly fossil fuels, passing the cost along to consumers. Grid operators also want to incentivize energy use habits that help protect their grid and ensure demand can be met. Tariff structures like peak demand pricing that base bills on how much a building demands during critical hours encourages building operators to save during those specific times, ‘flattening’ energy use to avoid peaks. All told, peak demand charges can account for 30-70% of a building’s total energy cost. Managing demand during peak hours can have an outsized impact on a building’s bottom line.
Smarter Meters
Peak demand management is all about understanding your buildings' energy demand profile and when energy use is most costly in your utility territory. To manage peak demand, building operators must have advanced metering infrastructure (AMI), or smart meters in place and a dashboard to visualize smart meter data in real time. Typically demand peaks around midday but varying climate and weather patterns make hourly prediction challenging. Connected smart meters can receive signals directly from grid operators, informing building operators of real-time pricing changes and demand response events where the grid operator directly asks for energy curtailment.
With the right data from meters, grid operators, and weather analysts, a building management systems like Nantum OS can begin automated peak demand management. First Nantum models energy use, tracking each day’s peak to predict the next. Before the day is over, Nantum OS tells building engineers the likelihood of a new peak demand tomorrow. When that new peak approaches, Nantum sends an alert to on-site engineers that the asset will soon set a new peak demand, raising the energy cost of the building. Nantum OS can then either automatically execute command and control functions of key building systems to avoid a new peak or engineers can manually do it themselves. The more energy curtailed, the bigger the payout.
Real-time Monitoring
Nantum’s real-time visualization dashboard allows anyone with access to see how the asset is performing against peak demand. The energy model shows typical demand, where new demand without curtailment was predicted and actual curtailed usage so engineers, operators and owners can watch the asset avoid new charges and protect the grid as it’s happening.
Energy pricing is getting more complex and grid operators must move to meet the surging demand for electrification. Because of the changes to energy markets and pricing, gamification of peak demand management has the potential to dramatically impact total energy costs when done right. Taking peak demand management seriously unlocks additional revenue while helping to ensure available energy for all during critical times.
