What does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving meanWhat does peak shaving mean

1. What does
Peak Shaving
Mean?

2. In the energy industry, peak shaving refers to leveling out
peaks in electricity use by industrial and commercial
power consumers. Power consumption peaks are important in
terms of grid stability, but they also affect power procurement
costs:
In many countries, electricity prices for large-scale consumers
are set with reference to their maximum peak-load. The
reason is simple: the grid load and the necessary amount of
power production need to be designed to accommodate these
peak loads.

3. Peak Shaving vs Load shifting
With peak shaving, a consumer reduces power consumption
("load shedding") quickly and for a short period of time to
avoid a spike in consumption. This is either possible by
temporarily scaling down production, activating an on-site
power generation system, or relying on a battery.

4. In contrast, load shifting refers to a short-term reduction in
electricity consumption followed by an increase in production
at a later time when power prices or grid demand is lower.
Dedicated generators or electricity storage facilities owned by
the power consumer can be used to bridge high-price or high-
load phases, but play less of a role if production will eventually
catch up again.

5. Peak Loads & Grid Usage Fees
Peak loads are not popular with grid operators; they must design
the grid based on the maximum amount of power that will be
needed. Nevertheless, everyday operation at many industrial
companies – such as powering up or increasing a production
process – can cause fluctuating loads on the grid.
It is possible to reliably detect the source of a sudden load
increase by monitoring power consumption. Depending on the
grid operator, these peaks are used to calculate grid usage fees
assessed to certain power consumers. The following example
illustrates how these additional grid fees are calculated for a
medium-sized company in Germany.

6. Calculation Example
A company has a constant load of 4,000 kW throughout the year
without peak loads. The company pays a fixed annual grid fee,
which is assessed per kilowatt. In this example, this is 50 € per
kW: 4,000 kW x 50 € = 200,000 € per year in grid charges.
A special production order causes an exceptional peak load of an
additional 500 kW, which lasts for just 30 minutes. The grid fee
increases immediately, with additional costs of 25,000 € based
on 4,500 kW of annual consumption. This is just to cover grid
usage and does not include the cost of electricity utilized by the
company.

7. Practical Application of Peak Shaving
As the example shows, in some cases peak shaving makes sense to avoid peak loads
and to keep grid usage costs low.
Peak Shaving Load Control (Demand-Side Management),
power storage, and generation
When it comes to managing peak loads, there are a few different approaches. “Peak
load monitors” track and regulate a pre-defined peak load every quarter of an hour. If
the monitor predicts that the accumulated peak load will exceed a certain threshold in
the next quarter-hour interval, certain power consumption processes are reduced. This
allows a company to determine and influence its maximum power consumption.
If reducing load is not desired or possible, a company can provide its own
supplemental power to avoid peak loads. Additional power could come from sources
such as the company’s own electricity storage facilities or CHP plants. This creates a
time-limited provision of power from the electricity storage facilities and/or a generator
within the company’s grid, which absorbs the additional peak load at the transfer
station before it reaches the public grid.

8. Peak Shaving, Energy Turnaround, & Flexibility
For distribution network operators, peak shaving is a good way to keep the
costs of network expansion low. An efficiently-operating network requires
less copper installation in the form of power lines and distribution points.
Uniform power generation and consumption is the ideal scenario, leading
grid operators to create an incentive for reducing peak loads, especially in
light of increasingly volatile feed-in from wind and photovoltaics.

9. Peak shaving reduces the quantity of power purchased by a facility during
hours of peak demand. This does not necessarily mean the facility is
reducing power consumption, although that is one peak shaving technique.
Reducing the amount of power purchased from the utility during the most
expensive times to do so saves the facility money over time. It also keeps
the facility from consuming more utility power than agreed upon by the
company and the utility.
When businesses install peak shaving capabilities in their facilities, it keeps
the power demanded from the utility more stable over time. Therefore, the
utility doesn’t need to expand to meet peak demand, because their large
customers are doing it for them. There are multiple techniques for peak
shaving. Some of the most common solutions include generators and
battery-stored renewable energy.

10. Peak Shaving Generators
One solution to reducing energy needs during times of peak consumption
is Onsite Generators. While there is an upfront cost associated with
installing generators capable of powering an entire facility, those costs may
be offset by savings with the utility.
Gensets in use during peak shaving must be EPA-Compliant because of
the non-emergency nature of the situation.
To plan for peak shaving generators, facilities will need to enlist support
from the utility, electricians and engineers. Using generators in this
strategic way can be more complicated than using them strictly for backup
power.

11. Peak Shaving Energy Storage
Instead of onsite power generation strictly during times of peak
consumption, this technique is constantly generating and storing power.
This is typically done with renewable wind or solar energy stored in
batteries. During times when utility power is more expensive, facilities rely
on the stored energy.
Reducing Consumption
Rather than offsetting reduced utility power with onsite generation,
facilities may opt to use less energy to level the load. Reducing
consumption could mean adjusting production schedules, turning off
machines or improving building efficiencies.

12. How Does It Work in Practice?
One challenge for manufacturers who are considering peak shaving is that
they don’t always know exactly what’s causing the shortfall. It could be that
the utility can’t meet demand. It could be, for example, that a load surge from
one machine is starving another of the power it needs to run. In any case,
identifying the peak (and the source of the peak) can be a complex, but
necessary, task.
“Sometimes, in order to really understand what that peak looks like, we have
to actually install a data logger,”. This measures down to the millisecond what's
happening on that circuit and shows “in real time” the height of that surge.
Depending on the granularity of the reading, the team will then be able to tell
how surges compare to average time data and can start to identify exactly where
the problem originates. For example, is it an unavoidable spike in demand or,
say, a badly performing motor in need of maintenance?

13. Peak Shaving with Solar & Storage
Peak shaving lowers and smooths peak loads, reducing or eliminating the
short-term demand spikes responsible for high demand charges. There are a
number of ways to peak shave, but some are better than others, and the
method used should match the load profile and electrical needs of the
business.
Traditional Methods of Peak Shaving
MANUAL INTERVENTION
The most straightforward and least reliable method is to manually manage
demand. For example, a plant manager could power down certain
machines during the on-peak window. These techniques can work, but
they’re not foolproof. A single mistake on one day could bring about a
very expensive power bill for the month.

14. CONTROLLERS
A similar, but more reliable method is to use controllers programmed
to prevent certain machines from turning on when power demand is
already high during the on-peak window. The downside to
controllers is that they may require customers to choose between
expensive demand charges and running machinery when it makes
business sense to do so.
DIESEL GENERATORS
Diesel generators can be used to manage demand charges by providing
additional energy during on-peak times, reducing the need to draw
from the grid. However, generators have several significant downsides.
They are costly to operate if used frequently, both in terms of fuel and
in terms of wear and tear. Generators also pollute and they are loud.

15. STAND ALONE SOLAR
Standalone solar arrays reduce electricity consumption very well and they can be used to
mitigate demand charges to an extent, but they can’t provide guaranteed peak shaving.
Cloud cover or shading can temporarily reduce solar generation and hamper the
effectiveness of peak shaving.
Peak Shaving With Solar & Battery Energy Storage
Solar with a battery energy storage system is the best way to peak shave. Battery energy storage
systems are dispatchable; they can be configured to strategically charge and discharge at the
optimal times to reduce demand charges. Sophisticated control software with learning algorithms
differentiates battery energy storage systems from regular batteries. These algorithms learn a
customer’s load profile, anticipate peak demand, and switch from the grid to batteries when needed
most. Battery energy storage systems can guarantee that no power above a predetermined threshold
will be drawn from the grid during peak times. They can automatically detect when power usage
exceeds a pre-determined threshold and switch from the grid or solar panels to batteries until
the additional demand is over. When demand goes back down the batteries recharge. For a
deeper explanation of these systems see our previous article in this series.

16. Solar + storage doesn’t have the downsides found with alternative peak shaving methods.
These systems are clean and quiet, require no employee time or active management to
operate, and don’t force businesses to choose between high demand charges and running
critical equipment. Solar + storage also makes solar viable for more customers, which in turn
generates electric consumption savings not related to demand charges.
There are many types of energy storage systems commercially available including lithuium-
ion, lithium-iron, and flow batteries.
The Ideal Energy design and engineering
team specialize in analyzing load profiles,
energy needs, and designs custom
peak-shaving solar + energy storage
solutions.