Understanding Your Energy Bill Part #3 — Strategies for Reducing Demand Charges

Energy accounts for about 30% of operating costs for a building, according to the Building Owners and Managers Association (BOMA). The total energy consumption for the month accounts for the major part of the energy expenses, but it is only part of the picture.

Depending upon how you use energy, a Demand Charge could be a significant part of your overall energy costs. In the case study featured in my last blog, the Demand Charge represented 10% of the total energy bill. Demand Charges are controllable and should be part of the overall energy strategy.

Energy Bill
Demand Charges are controllable and should be part of the overall energy strategy.

Demand Charges are dictated by your peak demand. To get a better idea of what peak demand is, think of it this way: if you turned on one 40 watt light bulb for an hour, shut it off, then turned on another 40 watt light bulb for an hour, you would have consumed 80 watt-hours of electricity, but since you only had one bulb on at a time, your peak demand would be only 40 watts. If you turn both 40 watt bulbs at the same time and leave them both on for an hour, your energy consumption after an hour would still be 80 watt-hours, but your peak demand would increase to 80 watts. Your usage bill would be the same, but your demand charge would be double!

Though it is certainly not practical to keep half of your building in the dark, there are many clever solutions with HVAC scheduling that can keep you comfortable while reducing your peak demand. When your Energy Services/HVAC Contractor has reduced your overall energy consumption, make sure they take the next step to reduce your Demand Charges as part of your energy strategy.

Here are some clever ways you can reduce your peak demand without impacting your comfort or productivity:

  • Stagger Occupied Start Times of HVAC – If you can prevent multiple units from starting up simultaneously, you can reduce peak demand. For example, if a building has four rooftop units serving four different spaces, you can set each area to come on in sequence, rather than all at once.  You may need to program start times a little earlier in the morning to get all rooms to temperature before the start of the day, but you won’t have a spike in energy demand all at once.  Start times should be at least 20 – 30 minutes apart to make sure that you don’t overlap.
  • Using sequencing techniques for HVAC units – When outside temperatures are moderate, you don’t need to run multiple stages of heat or cooling simultaneously to achieve comfort. HVAC systems are typically sized to meet your needs on the hottest/coldest days. Since most days are not so extreme, you don’t need to run both stages at once to effectively condition your space.
  • Look at Heating and Cooling Set Points – We all know comfort can be a very subjective thing. One person will be wearing a sweater next to someone in a tank top. If you can get away with running a little warmer in the summer 72 instead of 70, or a little colder in the winter 68 instead of 70, you will use less energy overall, and reduce peak demand at the same time.
  • Control Outside Air Intake – We all have heard about sick-building syndrome from buildings not having enough fresh air. But the opposite problem is actually more common. Most buildings exchange too much air. All that nicely conditioned air is literally going right out the window. By better controlling your outdoor air intake, you can still have healthy amounts of fresh air, and not cool or heat more air than you need to. This can be achieved by simply manually adjusting outdoor air dampers, smarter control of economizers, or by installing Demand Control Ventilation. Demand Control Ventilation actually measures the amount of carbon dioxide in a space and increases fresh air only as needed. It completely and automatically eliminates over-ventilation.

These are just a selection of the strategies that you can use to reduce your demand charge. Most can be easily accomplished through your existing Building Management System or by adding inexpensive programmable thermostats, sensors and controls.

Based on your specific operation, there may be even more ways that you can reduce your bill without creating noticeable changes in your work environment. If you’re interested in ways you can reduce your overall energy bill – or demand charges specifically – send us your energy bills and we’ll introduce you to our Energy WatchDog Killer Watts.

Killer Watts Energy WatchDog