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How to Cut Peak Demand Charges for Australian Businesses?


As an Australian business owner, have you noticed peak demand charges accounting for an ever greater portion of your electricity bills? These demand-based fees are calculated based on your site’s maximum power draw during each billing cycle. With demand charges running into the tens of thousands of dollars annually, getting these peaks under control is crucial. This guide covers everything your business needs to know to rein in costly peak demand.

Key Takeaways on Managing Business Peak Electricity Demand

  • Peak demand charges apply during a site’s 15-30 minute period of maximum power use each month
  • Load shifting, energy storage, efficiency and curbing discretionary usage help reduce peaks
  • Review interval energy data to identify and target where peaks occur
  • Adjust production schedules and transition heavier loads to off-peak periods
  • Adding solar PV and batteries spreads usage more evenly over time
  • Enroll in demand response programs for incentives to cut peaks
  • Perform energy audits and upgrades focused on high demand systems

What Are Peak Demand Charges?

Peak demand charges on commercial utility bills reflect the maximum rate of electricity consumption at a site in any 30 minute interval during the billing period, measured in kilowatts (kW). Utilities apply peak demand charges because supplying excess power for short spikes strains infrastructure.

Even if your overall monthly energy use stays flat, a single spike in usage triggered by something as short as a large motor or HVAC unit turning on can result in punishing peak demand fees. For this reason, shaving these peaks delivers immediate savings benefits.

What Causes High Demand Charges?

Certain operating patterns drive peaks, including:

  • Simultaneous operation of multiple large motor-driven devices like conveyors or compressors
  • HVAC equipment all switching on at once, like after a preset timer or power outage
  • Batch processing operations that compulsively run equipment at fixed times
  • Onsite equipment like diesel generators used only during outages, testing, or when primary power prices spike

Analysing your facility’s interval meter data helps pinpoint the source of peaks.

Strategy #1: Shift Loads to Off-Peak Windows

Staggering production schedules and equipment usage to avoid simultaneous overload prevents demand spikes:

  • Sequence motor start-ups and high energy processes outside peak hours when possible
  • Pre-heat or pre-cool spaces well before occupancy peak to minimise HVAC spikes
  • Consider time-of-use rate plans with cheaper off-peak rates as an incentive
  • Schedule high-demand machinery like welders in off-peak shifts if multiple shifts occur

Strategy #2: Install Energy Storage

Battery storage spreads usage over time by:

  • Charging from solar or the grid during low demand periods
  • Discharging to supply power during local peak times instead of drawing from the grid

AEMO estimates adding storage can reduce a commercial site’s peak demand charges by 25-35%.

Strategy #3: Enroll in Demand Response

Participating in your utility or third party demand response programs pays your business incentives to voluntarily reduce electricity usage when peaks are anticipated. This both lowers grid demand and provides revenue.

Strategy #4: Upgrade Inefficient Systems

Investing in efficiency upgrades to lighting, HVAC, building envelope, motors and more decreases overall facility demand. Targeting upgrades at high demand systems has the greatest impact on peak load reduction.

Other Helpful Tactics

  • Operating backup generators during less frequent but predictable peaks like seasonal usage spikes
  • Curtailing discretionary loads temporarily like shaping non-essential lighting
  • Raising cooling setpoints slightly or limiting heating during forecasted peaks
  • Monitoring building automation systems in real time to immediately respond to limit any unexpected spikes


With interval-level energy data, targeted analytics and proven demand management tactics, Australian businesses can gain control over costly peak demand charges. Careful planning and adjustment of production schedules, high-load processes and building systems are key. Partner with your utility and providers of storage, demand response and efficiency solutions to implement an effective peak management strategy. Taking charge of your facility’s peak demand leads to direct savings that boost your bottom line.


How much do peak demand charges typically add to a commercial bill?

Peak charges can represent 30-50%+ of a commercial building’s utility costs depending on energy intensity. Large facilities may incur fees ranging from tens of thousands to over $100K annually.

How can I access interval usage data to analyse peaks?

Interval energy meters or advanced metering infrastructure provide 15 minute (or less) usage data to pinpoint peak events. Energy management system data may also help identify peaks.

What duration are peak demand charges based on?

Most utilities measure peak demand based on the highest average usage sustained over a 15-30 minute consecutive period per billing cycle. Charges apply to the highest of these peaks.

When do peak demand charges apply during the day?

Peak windows vary by utility and rate plan – some apply year-round weekday peaks while others have defined seasonal peak hours. Review your tariff terms.

What expertise should I leverage to address high peak charges?

Start with your utility’s account representative. Bringing on specialists in energy storage, demand management and efficiency will provide additional strategies.

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