Battery Demand Charge Avoidance Calculator

Model how much peak shaving a commercial battery delivers on demand-charge tariffs, translate the avoided kW into annual utility savings, and estimate simple payback once you enter an installed cost per usable kilowatt-hour.

Highest 15- or 30-minute demand (kW) recorded on your bill before the battery begins peak shaving.
Tariff demand charge applied to the monthly peak demand, quoted in $ per kW.
Continuous discharge capacity the battery can provide for demand shaving (use the sustained rating, not the short-term burst).
Number of hours the battery can sustain the selected discharge power before needing to recharge.
Defaults to 12. Adjust if the utility bills demand charges on fewer or seasonal cycles.
Defaults to $0. Enter the fully installed cost per usable kWh (hardware + labour) to estimate payback.

High-level screening tool. Validate with detailed load data, dispatch modelling, and utility tariff analysis before investing.

Examples

  • 900 kW peak, $28/kW demand charge, 400 kW discharge, 2 hours, 12 cycles, $420/kWh ⇒ Demand shaved 400.00 kW (44.44%); $11,200.00 USD avoided per cycle; $134,400.00 USD annual savings; residual peak 500.00 kW; 800.00 kWh dispatch; $336,000.00 USD installed cost; 2.5-year payback.
  • 600 kW peak, $34/kW demand charge, 250 kW discharge, 3 hours, 10 cycles, no cost input ⇒ Demand shaved 250.00 kW (41.67%); $8,500.00 USD avoided per cycle; $85,000.00 USD annual savings; residual peak 350.00 kW; 750.00 kWh dispatch.

FAQ

How should I set the battery discharge power?

Use the continuous AC output rating available for peak shaving. If you plan to stack services, enter only the portion of power you can reliably dedicate to demand charge reduction without disrupting other use cases.

Can I account for battery degradation?

Apply a lower discharge power or reduce the billing cycles to reflect expected performance decline over time, or rerun the calculator with updated specs as the system ages.

What if my utility uses a demand ratchet?

Adjust the billing cycles to the number of ratchet months affected or run the calculator separately for each season and sum the avoided charges to capture the ratchet impact.

Does this include time-of-use arbitrage?

This tool focuses on demand charge avoidance. Use the Battery Energy Arbitrage Margin Calculator to value time-of-use spreads or wholesale market participation.

Additional Information

  • Demand shaved per cycle is capped by the smaller of the battery discharge power and the original facility peak demand, mirroring how utilities set billed demand.
  • Annual savings multiplies avoided demand charges by the number of billing cycles you expect the demand charge to apply, and you can adjust cycles for seasonal ratchets.
  • Residual peak highlights the kW that remains after the battery discharges, showing how close you are to tariff thresholds or contracted demand limits.
  • Simple payback divides the installed cost estimate by annual savings; if savings are insufficient, the calculator flags that the payback is not reached.
  • Dispatch energy (kWh) helps you compare the requirement to the usable battery capacity once round-trip efficiency and depth-of-discharge limits are considered.

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