Why We Hate Demand Charges and What We’re Doin’ About ‘Em
Updated: Apr 14
There’s not a lot to hate in the solar industry (Solyndra, maybe?). But if there’s one thing that can bring up negative emotions for a commercial solar installer, it’s utility demand charges.
If you’re reading this, you probably know what demand charges are. For those who don’t, they’re a nasty extra charge that utilities pin on commercial building owners when they suddenly demand a little extra energy. For example, if it gets a bit hot and someone (not you) suddenly turns up the air conditioning, the utility gets upset. Now the utility needs some extra power to compensate for dialing up the AC. Extra power is extra expensive because they keep it in reserve, so they slap the building owner on the wrist with a penalty demand charge that’s on top of the regular energy usage charges.…
Fine. Okay. Understandable. That’s not the reason we at Extensible Energy hate demand charges. We've got other reasons. Let us count the ways.
Reason #1: Demand charges are un-effing-forgiving
The first reason we hate demand charges is that they’re structured to be un-effing-forgiving. Like elephants, they’ll never forget you (not you, but your twin) turning up the AC. Ever. Even if your poor, hard-working building manager makes that demand mistake just once in a month, the utility often labels them as a demand addict for the entire year! Ye hath sinned, and ye shall pay thy utility dearly for the rest of the year based on your highest peak demand. Unlike parents and most religions, utilities are just unforgiving about any demand mistakes. Plus, demand mistakes are profitable… for the utility.
Reason #2: Demand charges are often based on your worst peak demand of the year
It would be nice for the utilities to structure demand charges for your average demand, wouldn’t it? But no. Even if you install solar a month later, your demand charge is assessed annually based on your worst 15 minutes of the month. A little judgey, no? Even if the building manager put duct tape over the thermostat’s controls for the rest of the month or installed solar, you get charged for the worst 15 minutes of your building’s life. And speaking of solar…
Reason #3: Demand charges are un-effing-forgiving with solar, too
Ya know, it’s one thing to make one demand charge mistake and pay up. It’s another thing to purchase a beautiful solar energy system to reduce energy usage, fight climate change, yada, yada, yada, and still get an SOB demand charge when a cloud goes by, spiking demand. Then the building owner calls you, the solar installer. and says, "Hey, look at this demand charge!" But what can you do? You’re a solar installer. You can’t control clouds! Gees! Demand charges don’t see all the good you’re doing for your building owner’s ROI or the planet. You crossed the peak demand line, and them’s the utility rules. Pay up. Hate it.
Reason #4: Demand charges kill solar deals
Let's say you’re a commercial solar sales pro. You’ve been educating the owner of an office building or a church or a car dealership for months. But because of the demand charges, the payback is a bit too long or the ROI isn’t big enough. Thanks a lot, demand charges! Not!
It’s depressing, isn’t it?
Before you punch a clown, let me tell you about a heroic software solution that will fight for you and your solar customer: It’s our DemandEx software.
That’s right. DemandEx is an AI software that’s programmed to hate demand charges and to prevent your worst demand charge mistakes from happening, saving the day—and saving your solar ROI! How? Because DemandEx has PeakHammer™.
You know Thor’s hammer? This ain’t that. It’s better.
Because once installed in about a day—without permitting, batteries, or extra wiring—DemandEx unleashes PeakHammer throughout the building. It analyzes all the loads, all your solar production, the temperature, and even predicts when clouds may block solar production. With all this sophisticated knowledge and such, PeakHammer quietly pre-cools the building.... and nobody notices. Then when the surprise cloud comes by, the air-conditioning is on low or off, preventing your worst demand spike nightmare. After the cloud passes, the solar gets up to speed, and Peakhammer slowly sets the temp back to normal, hammering that peak down by about 30%.
It may sound like fiction, but no. It’s Extensible Energy’s DemandEx, and seriously, it’s an intelligent software that’s designed to optimize a commercial solar building’s flexible loads, reducing demand charges. In some cases, it can eliminate them entirely with HardCap, but that’s another press release.
So, if you love demand charges, don’t share this post. But if you hate demand charges as much as PeakHammer (and us), become an Extensible Plus solar partner and let’s all crush demand charges together!
Shane Wright is Extensible Energy's business development manager. He does not like demand charges. PeakHammer is his hero. Contact Shane to tell him your bad demand charge stories here.