Peak Shaving: solar energy storage methods to reduce peak load

Amanda Amara

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In most commercial and industrial buildings, the load energy consumption varies throughout the working day, with telling peaks and troughs. To meet this fluctuating demand, utility providers start and stop different electrical plants to match the global offer and global demand. 

Some of these electrical plants only operate a few times a year to always deliver the proper quantity of electricity no matter the demand peak during the year.

This reliability comes with a cost that the utility usually finances via the customer. In most countries, the electricity bill of a building is determined by its energy consumption via a price per kWh (energy) and its maximum peak consumption via a price per kW (power). In some cases,  if the building is exceeding its maximum peak consumption, the utility applies penalties.

But how can a building avoid these penalties and reduce its bill without changing its load profile? Peak Shaving can be one solution to solve this issue.

What is peak shaving?

Peak shaving generally refers to leveling out peak use of electricity by industrial and commercial power consumers. The first purpose of Peak Shaving is to save on the electricity bill. How does peak shaving help to reduce costs? 

To better understand the stakes of peak shaving, let’s start by figuring out how the electricity bill is structured. The electric company monitors your power consumption at fixed time intervals every 15 minutes. The measurement of how much electricity is being consumed and at what rate it is in kW. In fact, for large users, such as manufacturing and distribution facilities, the electricity bill consists of two parts:  

  • Energy consumption : it corresponds to the primary energy charges for the total amount of electricity used throughout the billing period. The total amount of electricity used is measured in kWh.


  •  Demand charges : demand charges measure the rate at which energy is consumed. The electric company charges its commercial customers a specific amount of money for each kW of Demand which occurred in that month. This is, in a given month, the highest point of consumption for that month. It is measured in kW.


In practical terms, Peak Shaving is the process of reducing the amount of energy purchased – or shaving profile – from the utility companies during peak hours of energy demand to reduce the peak demand charges and make savings. In other words, it consists of flattening the load profile.

With peak shaving, a consumer reduces power consumption (“load shedding”) quickly and avoids a spike in consumption for a short period. This is either possible by temporarily scaling down production, activating an on-site power generation system, applying energy shifting, or relying on a battery.

Peak shaving strategy with solar and BESS

For some industries, and their production’s proper functioning, changing the load profile can be difficult. However, a company can provide its own supplemental power to avoid peak loads.

 Additional power could come from alternative sources such as an energy storage system, gensets, and/or power plant. This creates a time-limited provision of power from the electricity storage facilities and/or a generator within the company’s grid, absorbing the additional peak load.

Peak shaving with battery storage

The basic concept behind this strategy is straightforward:

  • With on-site storage, batteries charge at the lowest cost (during off-peak hours or with your free solar energy),
  • Batteries then discharge to avoid paying peak prices during the most expensive times of the day.

This strategy allows to save on electricity bills on three different levels :

  • Avoid penalties due to peak power demand excess,
  • Negotiate with the utility the new maximum demand, which will be lower than before,
  • Discharge the battery with electricity bought at the lowest rate.

Furthermore, peak shaving with batteries isn’t something you must actively manage. With an energy management system well configured, your energy storage system can intelligently regulate the battery charging without human intervention.

Autonomous peak load control

Regardless of the chosen configuration, implementing an EMS is a must-have to achieve peak shaving applications for C&I installations.

Elum’s Microgrid controller is compatible with most solar inverters brand, storage inverters brand, and other distributed resources. Our controller allows the BESS to charge from the grid during the off-peak hours and discharge when the load is high, taking into account the local pricing and grid specificities

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