Peak Demand Charges
A utility billing fee calculated based on the highest rate of electrical power (kW) drawn by a household or building during a specific peak interval within the billing cycle.
Peak demand charges are utility bill tariffs based on the maximum instantaneous power demand (measured in kilowatts, kW) registered during a defined window (typically a 15-minute or 30-minute peak interval).
While traditional residential billing charges only for total energy consumed (kWh), utilities increasingly implement demand charges to penalize customers who draw high simultaneous power spikes (e.g., running air conditioning, EV charging, and a clothes dryer simultaneously).
Home batteries perform peak shaving: the battery discharges during high load spikes to cap grid demand below the utility's penalty threshold.
Why it matters
Peak demand charges can represent 30% to 50% of an electric utility bill. Batteries reduce these charges through automated peak shaving.
Example
Discharging a battery at 5 kW while an EV charges and AC runs prevents a 10 kW grid demand spike, saving $150 per month in utility demand charges.