Demand charges are used by some utility companies to determine how much they will charge a customer for electricity during a calendar month. The utility bases its per kilowatt-hour rate on the highest demand a customer had for electricity in that month. The higher the customer’s peak demand was that month, the higher the price they’ll pay per kilowatt-hour for electricity. A load controller is a device that limits peaks in electricity demand.

How demand charges work

Electricity demand is the amount of energy being used at any one point. Running many appliances at once results in high demand, whereas spreading out appliance use throughout the day results in lower demand. 

Utilities that use demand charges charge customers based upon their highest demand for electricity used within a month. To do so, they calculate the total peak demand within that month, which is measured in kilowatts. They then multiply that by a dollar amount per kilowatt. The more kilowatts a customer uses, the more they are charged per kilowatt. 

How a load controller works

Load controllers empower customers to limit demand and save money by automatically turning off appliances when it finds that the demand is too high. Load controllers can be completely customized based upon the needs of the customer, such as setting the maximum demand or the order of priority of their appliances.

For example, a television, a refrigerator, a computer, and an air conditioner are all running at the same time and that results in a total demand of 4 kilowatts. Add an electric dryer to that load, and demand spikes to 6 kilowatts. Without a load controller, the customer would be charged the kWh rate corresponding with a 6 kilowatts peak demand that month. 

But if you had a load controller and set it to allow for a maximum demand of 5 kilowatts, it would not allow 6 kilowatts worth of appliances to run at the same time. If the load controller was set to prioritize the air conditioner over the dryer then the load controller would kick in when the dryer was switched on and cut power to the dryer in order to keep the total demand under the 5-kilowatt limit. Once the air conditioner or other appliances turn off and allow for more demand, the load controller would again kick in and turn the dryer back on. The load controller spreads out energy use throughout the day and that keeps demand low to save money.

Load controllers can work with home batteries

While load controllers may not be for all customers, they can be a great tool to save money for those that are willing to adjust their energy use habits. Battery storage is another option to better manage peak usage, and for an ultimate level of control, you could even pair the two. The battery could kick in and provide some of the electricity needed so that the demand from the utility company remains low.

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