Peak shaving is the process of reducing the amount of energy purchased from the utility company during peak demand hours. Utility companies typically have variable pricing based on demand, and the pricing during the peak demand hours is typically the highest. This pricing structure allows the utility company to bring on additional capacity to meet the peak demand. This additional capacity is typically older, more expensive power generation equipment. The peak pricing also acts as encouragement to customers to reduce demand in order to drive down utility costs. The tiered pricing is what might make peak shaving an attractive option to organizations with large electrical consumption during peak times.
There are several ways to peak shave. A couple of the options include reducing consumption by turning off non-essential equipment during peak hours and installing automated thermostats to help reduce consumption. You can also install solar and battery solutions that can assist with reducing demand.
Both are reasonable options, but one of the best solutions is using generators to peak shave. One compelling reason is that peak shaving with generators offers the added benefit of being able to provide power to meet some or all demand during a complete power outage. Also, most utility companies are familiar with this type of peak shaving and have resources to assist in the design and implementation of this type of system. Some systems can even be designed so that the utility provider controls the peak shaving generator. In this scenario the utility provider determines when the demand is there, starts the equipment, and removes the load from utility power.
Peak shaving with generators typically has a return on investment between three and five years. Generators typically last 15-20 years so reduction in utility costs results in savings for ten plus years on a peak shaving project.
Using generators for peak shaving is not as simple as deciding to peak shave and starting your emergency generators to transfer load during peak hours. The generators and switchgear equipment are typically more complex than a generator system intended for emergency back-up, and a financial analysis should be completed to ensure that peak shaving will meet the financial goals of the organization.
There are several factors to consider including equipment cost, installation cost, coordination, and planning. The planning stages of a peak shaving project should include engineering support, utility company participation, electrical contractors, generator and distribution supplier, as well as the local facility team. Getting the right people involved early in the process can help the project remain on time and on budget, getting the best return out of the investment.
If an organization has high utility expenses, peak shaving should be investigated every few years as the organization grows. While it may not make sense initially, it might make sense as utility expenses and power demand increase.