You would have noticed your electricity bill varies month-to-month. There are various factors that can affect your bill’s total. Maybe you opened a restaurant a few months ago, and you’ve been noticing the electricity bill going from extremely high to lower every month. You would probably wonder how can that be. This oscillation can be interpreted as peak demand. In this article, let us see what is meant by "peak demand" and how we can reduce it.

What is peak demand?

While electricity rates are dependent on many factors, one of them is the amount of electricity used and when it is used. Simply put, peak demand is the highest instance of power consumption in a given time frame, generally a rolling fifteen-minute window. Peak demand can represent a rise in power consumption, such as when turning on the air-conditioning in a company or starting up an electric motor in an industry. Your energy provider must be able to provide you with that amount of power, but the infrastructure required to provide that power at a moment's notice comes at a cost. Despite advancements in technology and energy efficiency, peak demand has a considerable impact on energy costs.

Peak demand charges can account for 30% to 70% of your electric bill. Rates for peak demand differ significantly and are determined by various factors such as region, utility provider, tariffs, and pricing structures. In some countries, peak demand charges are one of the costliest parts of the total utility bill.

Peak Demand Reduction

There are various ways you can lower peak demand, from installing motion sensors in all rooms to disconnecting unused electronics. To help you cut down on your peak demand consumption and reduce your overall energy use, here are some strategies for managing and decreasing the peak demand for each system.

1. Identify your peak usage times If you know when you are using the most power each day, you can find ways to reduce the blow to your transmission wires. There are many types of technology that best help monitor a premises’ energy consumption. An energy management system will give the most insight into your load profile and will make sure equipment will not peak at the same time, causing a strain.

2. Using a Generator A smart solution being applied across multiple industries is using a generator. During peak load hours, by taking the entire or partial kW off the conventional electricity source and supplementing it with a generator, you can significantly lower energy spikes and lower demand charges by as much as 30%.

3. Install motion-activated lights While motion-activated lights won’t necessarily lower your peak demand charge, they will help you lower your total power demand and utility bill. Motion-activated lights ensure you’re consuming energy efficiently, as lights will switch off when you’re no longer in a room for a given period of time.

4. Using a Renewable Energy Source Decreasing your overall electricity demand and energy use can help lower your peak consumption and overall utility bill. But renewable energy can help you in an even greater way. Using renewable energy can enable you to cut down on your electricity bill and lower your carbon footprint.

5. Take Control of Your Electric Bill Utility bills can be complicated and confusing. With the right insight and information, you can better understand peak demand. While this is only one element of your bill, it’s a big thing that can lead to expensive energy consumption and frustration. Conserve energy wherever you can, consider shifting to renewable energy, and take complete control of your electric bill.


Building operators are conscious of peak demand and its effects on utility bills, but executing a peak demand reduction strategy can be challenging. Every business and industry has a unique load profile; one peak demand reduction strategy will not apply to all companies. Solving peak demand problems without real-time data, forecasting, and energy visualisations is an unrealistic task. Real-time monitoring of equipment can help you recognise a peak demand problem before it reflects on your bill. To begin addressing peak demand issues, it is important to have a good understanding of what peak demand is and the difference between energy and power.