Using software to shift peak demand usage

Engineers can offer building owners the ability to monitor and manage electrical consumption to adjust power demand and minimize energy costs.


Figure 1: An energy summary report provides a snapshot of consumption (kWh) and demand (kVA) for a specified time period. Courtesy: Eaton Corp.What’s a simple and effective way to reduce speeding tickets? Driving the speed limit is likely a good start. Alternatively, keeping a close eye on the speed limit just in high-risk areas, like school zones, could also go a long way toward meeting the goal. No matter how the problem is approached, checking the speedometer to monitor speed is essential. Although the speedometer certainly does not solve the problem, it provides crucial information to adjust how heavily we hit that gas pedal. 

In a highly competitive business climate, organizations are striving to find ways to find efficiencies and cut costs. As electric bills make up the bulk of energy expenditures for institutional, commercial, and industrial facilities, reducing that bill directly translates to a positive impact on the organizations’ bottom line. 

Metering electrical equipment and aggregating that information through power management software and reporting provides crucial information so that operations can be managed to reduce energy costs. Analogous to the speedometer, this power monitoring system will not reduce bills by itself, but it provides critical information that allows organizations to identify system inefficiencies and wasteful practices to realize real energy savings. 

As organizations look to reduce electric utility bills, simply managing peak demand consumption and shifting non-essential processes to off-peak hours can dramatically cut costs, even if total energy consumption stays the same. In other words, managing when and how power is used reduces electric bills. Software and reporting tools provide visibility and crucial information to adjust operations in a way to reduce peak demand charges and realize real savings. 

Getting the data 

An electric utility bill provides a breakdown of these four charges (see sidebar, “Electric utility bills defined”), so organizations can see in what month demand charges are high. To understand which systems or equipment are drawing energy that defines a given month’s demand charge, the electric bill falls short on information. But software and reporting programs can provide this level of detail. 

First, metering equipment needs to be installed at the service entrance and on large and critical load circuits. Meters keep a continual log of electrical parameters and provide a roadmap of what is going on with electricity in a facility. But that vast amount of data needs to be aggregated and analyzed—meters need to be read, the data logged, and analytics applied. 

Software aggregates energy information and reporting programs analyze that data and generate reports that can be acted upon. Designed to track historical energy consumption and trends across a facility or enterprise, software and reporting programs help facility and energy managers see beyond an individual load. This information allows organizations to identify demand anomalies and opportunities for improvements. 

With a robust metering and communications infrastructure in place that logs and collects data, power management software and reporting can perform analytics, drilling down into an electric bill to allocate or compare costs between departments and facilities, and making it easier to see where and when peak demand charges occur. Also, it makes it possible to share the burden of energy expenses across departments and incentivize energy savings. Knowing is half the battle.

Reducing peak demand 

Changing when and how large equipment comes online can generate significant savings on both demand charges and help switch from peak to off-peak rates (actual power used). Demand charges focus on the 15- or 30-minute window of maximum power used in the month. Even if this peak is abnormally high or only occurs a single time during the month, the utility will still charge based on this peak usage. 

For large industrial users that typically use in excess of 5 MW of power, energy rates are negotiated and there are tremendous incentives to make sure that demand stays below a defined ceiling. Above that ceiling, demand charges can be 10 times higher. To keep operations in line, meters can be used to send an alert when specific equipment reaches a certain usage. On the other hand, software can aggregate that information so that users can be notified before a peak demand ceiling is reached across a system or plant. For example, software alerts can be set at an 80% threshold of the demand window, enabling personnel to monitor and respond to situations in real time. 

Staging electrical loads so that systems are not suddenly turned on at once, reduces demand charges. For example, in an industrial facility for plastic extrusion, the system may involve five motors. Suddenly starting all the motors at the start of a shift would set an artificially high demand window. To reduce the demand charges, motors can be staged, which refers to the delay in starting a second or third motor until the first motor has completed its cycle. Motor staging requires that motors are started as far apart as possible. Typically, this is 15 to 30 minutes apart, as peak demand often is measured in 15- to 30-minute intervals. This does not actually reduce the amount of power used, but it does mean that the peak demand window now would capture the system demand for one motor versus five. Over the course of a year, this can save thousands of dollars. 

Similarly, a college campus that flips the switch on all of its stadium lights at once or turns on the lights across a facility at the same time creates a tremendous demand on the utility. Without analyzing energy trends, it is difficult to see that all the lights are coming on simultaneously across a campus. And it is difficult to change what you cannot see. To reduce that demand without dimming the field or campus, the institution can start early, turn on a quarter of its lights, then turn on another quarter a half hour later, and so on, staggering the load to reduce demand. Now, those demand peaks are a quarter of what they would have been had the switch flipped on all of the lights at once. 

In an office building where the typical day starts at 8:30 a.m., turning up the HVAC system at the same time would be much like starting five motors at one time. As workers come in and turn on their computers, copiers, coffee makers, lights, and other equipment, adding an air conditioning load could easily draw an incredible amount of energy at one time. Instead, turning on the system to cool a few hours earlier would save on demand charges. Even if the total consumption in this case were increased to accommodate starting the system earlier, the overall costs would be decreased—as demand charges are 10 times the cost of actual power used. 

To determine when peak demand charges occur and what is causing that energy demand, a metering and software program is required. 

Using cheaper power 

Figure 2: An energy cost allocation report provides information about a total energy bill dollar value or a cost per kWh across a facility hierarchy for a defined timeframe. Courtesy: Eaton Corp.Taking advantage of off-peak rate periods is much like having one’s cake and eating it too. Fundamentally, shifting loads allows organizations to capitalize on cheaper power rates by merely changing the timing of operations. 

Utilities typically have two or three tiers of rates for actual power consumed. Shifting nonessential loads or operations to take advantage of cheaper rate periods can pay dividends. 

For example, water utilities may take advantage of off-peak rates by filling water tanks at night and allowing the tanks to run down during peak rates. While certain high-demand days may not allow load shifting, these savings are available whenever the motor load can be shifted to off-peak rates and is not directly tied to the demand charge. Moving a load from the peak demand period and peak rates could save on both line items on the electric bill. 

Using software and reporting tools to establish goals toward reducing peak power demand can help identify operations and systems that can be shifted to reduce energy costs. A baseline comparison report helps track improvements and verify that the building’s energy systems are installed, calibrated, and perform according to expectations and goals. It can help organizations compare how changing operations can reduce energy costs, shifting peak demand, and help a water utility see how taking advantage of off-peak rates can reduce bills. 

Software and reporting 

Power management is more than reducing consumption. Managing when and how energy is used can dramatically cut electric utility bills—even if total consumption stays the same. In a highly competitive business climate, intelligent power management is helping to control costs and reduce energy requirements.

Power monitoring software and reporting solutions have been around for 10 to 15 years. By monitoring data and identifying vital statistics, a power monitoring system with meters, software and reporting helps to reduce energy costs and improve the efficiency of the facility and organization.

Electric utility bills defined

A typical electric bill has four components:

  1. Customer charge is rated loosely on the connection size. So this fee varies for small, mid-range, and large industrial users. Roughly speaking, large industrial organizations pay twice as much as mid-range users, who in turn pay twice as much as small organizations.
  2. Actual power used measures energy consumption in kilowatt hours (kWh) and typically varies depending on the time of day that energy is used. Depending on the utility rate schedule, there may be two or three tiers of charges that are defined by the time of day that the power is drawn.
  3. Demand charge is the maximum capacity that the utility needs to provide a facility, and charges are based on that capacity. These charges are for the maximum usage period of kilovolt-amps (kVA) over a specific timeframe, which can be as short as 15 minutes in a billing cycle. Typically, these charges are 10 times the cost of actual power consumption costs. Demand charges include real power and reactive power on the system and commonly are called “apparent power.”
  4. Power factor is a penalty for variations in apparent power used. At this time, not all utilities impose penalties for low power factor. 

Marty Aaron is the product line manager at Eaton for software and connectivity products and has more than 25 years of experience in the electrical industry, with expertise in both industrial motor control and power quality. Marcus Maxwell is the product manager at Eaton for Power Xpert Software and Reporting with more than 20 years of experience in IT and power management system software in Europe and the United States. 

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