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Managing peak load costs

As a consumer of electricity from the grid, you pay for both the actual energy you consume (kWh) and the amount of energy that needs to be available to serve your account based on your peak load (kW demand). This peak kW, or peak load contribution / capacity tag / cap obligation (various names depending on market), can comprise up to 50% of your supply bill and more than 30% of your total electricity bill (supply + delivery).

Through conscious management of your load, or Peak Load Management (PLM), you can clip these peaks and significantly reduce your electricity costs, both in the current period (delivery) and during the next capacity period (supply).

See how PXEVA can help with peak load management


Implementing a peak load management plan

With significant costs at stake, organizations need to develop a plan to manage peak load and reduce expenses.

Our platform, Power Xpert Energy Visualization and Analysis (PXEVA), will help you with peak load management by monitoring the grid’s consumption and weather in real-time and predicting when peak load hours are likely to occur.

Using that information, you can decide what actions to take to reduce load and save money.

Eaton's cloud-based energy management solution, PXEVA, can help your peak load management plan with:

  • Monitoring and alerts
  • Energy procurement strategies
  • Measurement and verification
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PXEVA software - peak load management predicitive analytics

Monitoring and alerts

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Predictive analytics monitors the grid’s consumption and weather in real-time and predicts when peak load hours are likely to occur. 

In this event, we alert you through day-ahead and day-of emails, giving you enough time to take action to reduce your demand when its most important.

Energy procurement strategies

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To ensure full advantage of your peak load reductions when managing your RFP for electricity supply, we can:

  1. Pass through capacity, rather than hedging for the contract term. When you hedge beyond the capacity period, and the supplier is absorbing the risk of capacity tag and price fluctuations, then you will not be able to realize the reduced capacity payments costs when you have reduced your capacity tag until a new contract is signed
  2. Negotiate capacity adjustment clauses in the supply contract. If you’re actively reducing peak demand, but want to hedge capacity for a period longer than 12 months, then negotiate that suppliers will adjust the capacity tag when new tags are released
  3. If you’re reducing peak load through load shifting strategies such as battery or ice storage, pass through energy costs as well in order to take advantage of the difference between on-peak and off-peak hourly pricing. If you’re contracted under a fully fixed rate, then the only advantage is the peak demand savings, and you’re not realizing the value of the arbitrage between on- and off-peak LMPs

Measurement and verification

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With PXEVA can measure & verify all of your peak load capital improvements and operational strategies to ensure your plan is effective.

To ensure your efforts are successful, your energy management program should measure and verify your peak load reducing capital improvements and new operational strategies.

Eaton's M&V services:

  • Track all the invoice and metering information real-time to uncover any inconsistencies
  • Act as a neutral third party
  • Comply with guidelines outlined in the International Performance Measurement and Verification Protocol (IPMVP) and ASHRAE Guideline 14, the national measurement and verification standards in the United States and many other countries
  • Provide oversight from an AEE Certified Measurement & Verification Professional

   Peak load management FAQs

Why is peak load management important?

Supply/ESCO Rates: The higher your ICAP tag, the more capacity you will need to purchase, and the higher your $/kWh price (all else equal) because the grid has to be prepared to meet your peak demand at any time.

Your monthly payments are determined by both the actual energy you consume (kWh) and the amount of energy that needs to be available to serve your account based on your peak load kW demand. Your PLC/ICAP tag sticks with you for a full year period, regardless of your actual monthly demand moving forward.

How much savings is possible through a peak load management plan?

When combined with capital improvements, peak load management can save hundreds of thousands of dollars annually, while reducing GHG emissions by shifting load overnight (baseload nuclear and wind power) and avoiding the dispatch of the dirtiest generation used during the peak hours (oil peakers).

What type of capital investments can be made to help with peak load management?

  • Energy storage systems:
    • Battery storage
    • Thermal (ice) storate
  • Adding capacity via on-site generation
  • Motor controllers of variable frequency drives