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Phoenix Energy Blog
Choose the best energy supply option for your business in New York

What is "Peak Demand" and How to Reduce it


When you are paying your electricity bill, you probably notice that your rate varies month-to-month? Maybe you opened a restaurant a couple months ago and you’ve been noticing the rate going from extremely high and reducing every month. How can that be?

While electricity rates are dependent on many factors, one is the amount of electricity you you and when. Called your “peak demand”, the highest amount of energy used during a 15 minute period throughout the month determines a large part of how your rate per month is established.

Imagine it this way: you turn your lights on and off normally throughout the day and have no other appliances or electricity flowing through your home. One day, however, you have a party and bring a sound system, refrigerators and the oven on, Con Edison didn’t plan on you using as much energy as you had, so there was a strain on the transmission lines. To avoid that strain next month, Con Edison will be better prepared with that energy for you even if you go back to using much less all next month. If you don’t throw another party, your peak demand will level out again and reflect in your rates.

The question, then, is how does one level out their usage? There many strategies and technologies to help with this nowadays- from occupancy sensors in all rooms, to unplugging unused electronics, there are many best ways to reduce the peaks in your electricity usage throughout the day.

If you can identify when you are using the most power each day, you can find ways to lessen the blow to your transmission wires. “Load-Shedding” is the industry term for shaving off your peaks of highest kW usage. There are many forms of technology that best help monitoring a building's energy usage. An energy management system (EMS) will provide the most insight into your load profile and will ensure equipment will not simultaneously peak producing a strain.


A smart solution being employed across many industries is using a generator. During peak load hours, by taking the entire or partial kW off of the traditional electricity source and supplement with a generator, you can greatly reduce your spikes and reduce demand charges by as much as 30%.

Moving towards the future, there are new technologies to help buildings resolve this. Batteries are extremely beneficial to storing energy to use when there is a significant crest in usage. Even more so, there batteries integrated with and energy management system can practically reduce all peaks and valleys in electricity usage. Check out STEM which does just that and makes managing your usage intelligent and simple.

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