Reducing Energy Costs by Avoiding Demand Charges

Background

Energy demand charges are a significant portion of electricity bills for industrial and commercial businesses, especially those with high power usage. Demand charges are calculated based on the highest level of power consumption during a billing period, typically within a 15-minute interval. For businesses that operate heavy machinery or equipment, these charges can quickly inflate energy costs if power consumption spikes unexpectedly during peak periods.

A manufacturing facility had been grappling with high demand charges that significantly impacted its bottom line. These charges arose from instances where their equipment demanded more power than their allocated threshold, even for short intervals. As part of their broader strategy to manage energy consumption and costs, the company decided to tackle demand charges head-on.

In response, the company engaged Truewatts to design a solution that would help them monitor and manage their energy demand more effectively. The goal was to avoid exceeding demand thresholds and, consequently, reduce the financial burden of demand charges. This case study describes the first phase of the project, where a demand monitoring system was introduced to alert operators in real time, helping them make timely decisions to prevent demand peaks.

Challenge

The primary challenge the company faced was the lack of visibility into their real-time energy demand. Operators had no clear way to monitor when their power usage approached the demand limit. This often resulted in unintentional demand peaks, which triggered high charges for the facility. The company needed a system that could provide real-time feedback and enable proactive energy management.

Specifically, the company wanted a system that could:

Monitor Energy Demand in Real Time: A solution was needed to track energy demand as it fluctuated throughout the day, helping operators stay aware of consumption trends.
Provide Immediate Feedback: Operators required a clear, simple way to see when energy consumption was approaching the threshold. This would enable them to take immediate action, such as rescheduling certain equipment usage or slowing down operations to avoid demand peaks.
Ensure Quick ROI: The solution needed to deliver a return on investment (ROI) in less than six months. The facility wanted a cost-effective solution that could reduce energy costs quickly without requiring a large upfront investment.

Solution by Truewatts

Truewatts designed a demand monitoring system as the first phase of a larger energy management project. The system consisted of a real-time energy demand monitor integrated with an LED display that was easily visible to operators on the shop floor.

Real-Time Demand Monitoring: Truewatts installed energy meters throughout the facility to monitor power consumption in real time. These meters tracked energy demand and provided data on when consumption was nearing the facility’s pre-set demand limits. This data was then relayed to the operators in real time.
7-Segment display and tower Light for Instant Alerts: To make the system intuitive, Truewatts installed a large 7-segment segment display that continuously showed the current energy demand. The display was positioned in high-visibility areas so operators could easily monitor the facility's power consumption. The tower light will flash when consumption approached a critical threshold, signaling operators to take corrective action.
Operator Training: Truewatts also provided basic training for the facility’s operators to help them understand how to adjust operations based on real-time demand data. This included how to reduce equipment usage during peak periods or stagger energy-intensive processes to avoid hitting demand charge limits.

Results

The implementation of this demand monitoring system delivered immediate benefits to the company, providing an ROI in less than six months as planned. Key outcomes included:

Avoidance of Demand Charges: With real-time demand monitoring and visible alerts, operators were able to prevent demand peaks by adjusting their operations accordingly. The company avoided several instances where energy consumption would have exceeded the demand threshold, saving them substantial amounts in demand charges over the billing cycle.
Increased Operational Awareness: The 7-segment display gave operators a clear, immediate understanding of the facility's energy consumption. This led to better decision-making on the shop floor, as operators could act proactively rather than reactively.
Quick ROI: Due to the simplicity and cost-effectiveness of the system, the company recouped their investment in less than six months. The demand monitoring system required minimal capital investment but delivered significant savings in demand charges, helping the company meet its financial goals for the project.
Foundation for Future Phases: This project was only the first phase in the company’s broader energy management strategy. With a successful demand monitoring system in place, the company is now exploring additional measures such as automated load shifting and energy storage solutions to further optimize energy consumption.

Conclusion

The introduction of a demand monitoring system with a real-time LED display significantly reduced the company’s exposure to high demand charges. By providing operators with clear, actionable insights, the system helped them stay within their demand limits and avoid unnecessary energy costs. The project delivered a rapid ROI of less than six months, making it a cost-effective solution for managing energy demand.

This case study highlights the importance of real-time monitoring and feedback in energy management. By empowering operators to take action in real time, businesses can avoid costly demand peaks, optimize their energy usage, and achieve substantial savings. With further improvements planned, the facility is now on a path toward long-term energy efficiency and cost reduction.