How do demand charges affect commercial solar savings

Role of demand charges in commercial electricity bills

Demand charges are fees based on the highest power draw (kW) during a billing period and can represent a large portion of a commercial electricity bill. Solar reduces energy (kWh) consumption but may only partially reduce peak demand if peaks occur in evening hours or when solar output is low. Thus, savings from solar depend on how much it can reduce the measured demand peaks.

Ways solar affects demand charges:

• Solar can lower midday demand peaks, especially if the peak coincides with high solar production
• If peak demand occurs after sunset, solar alone may have limited effect
• Combining solar with battery storage or demand management can significantly reduce demand charges

Strategies to maximize savings

• Analyze utility billing structure and demand peak timing
• Implement battery storage to shave peaks and shift solar energy to peak windows
• Use load management and energy efficiency measures to lower base demand

A detailed load profile and utility bill analysis are essential. For many businesses, the addition of storage or targeted demand-side measures is necessary to capture meaningful demand charge reductions and unlock the full financial benefits of solar.