Tip 7: Reduce Demand Charges

In this final post on energy efficiency in restaurants I will move away from a focus on energy usage to address an area that is less well understood by many people – energy demand.

Most restaurants pay not only for the amount of electricity they use in a month – measured in kilowatt hours – but also for their peak energy demand – measured in kilowatts – for any 15 (or 30) minute period in the month. (Some utilities even charge what is known as “full ratchet” demand rates, which are based on the peak demand at any time during the year, and retroactively charge at that level for every month regardless if a higher peak occurs later in the year). Demand is a measure of instantaneous usage, and utilities charge for this because providing service during peak periods is much more expensive than at other times of day.

In some cases, demand rates are fairly low, perhaps only a few dollars per kilowatt. But that can range up to $20 per kilowatt – or even more for utilities with tiered demand charges. A peak demand of 90 kilowatts and a rate of $12/kW will add $1,080 to a monthly bill. If you can find out when your peak demands occur, you may be able to identify ways to turn off or turn down some equipment during typical peak periods in order to lower your demand charges. There may also be process changes that can lower demand charges. For example, deliveries often cause freezer or refrigerator doors to be left open for extended periods, driving up energy demand. If they occur during peak hours, shifting delivery times could result in lower demand charges.