What is peak shaving and how does it work?

Peak shaving is the term used in energy management for the reduction of energy consumed during peak demand on the electric grid. Peak demand is the peak at which energy consumption is at its highest, for example, in the morning when people wake up and in the evening when they return home from work. Such peaks in electricity demand can be difficult for the electric grid and may lead to power outages and blackouts if the electricity supply cannot match the demand. This guide goes in-depth to describe what peak shaving is, how it works, and why it is important in today’s energy mix.

How Does Peak Shaving Work?

Power saving peaks are used to reduce the top off the peaks as they cut demand from the electrical grid during periods of peak. In three main ways can this happen:
  • Scaling back usage: A decline in power is achieved by simply reducing output or altering the whole operational process.
  • Exploiting energy stored: Applying energy already stored within the BESS to fulfill demand.
  • Generation of power on-site: Activating a local unit for power generation, such as natural gas generators, solar panels, or windmills.
This process effectively reduces the peak of the demand curve, which is why it is called “peak shaving.”

Peak Shaving vs. Load Shifting

Load shifting, or demand response, is another energy management technique that optimizes electricity utilization to cut costs and take pressure off the electric power grid. Similar in intent but different in operation, load shifting is as follows:
  • Shifts the consumption of energy from high-demand time (peak hours) to low-demand time (off-peak hours), leveling out the demand curve over the day.
  • Peak shaving reduces usage during peak times, usually using stored energy or on-site generation.
For example, instead of charging electric vehicles or running heavy industrial machinery during peak hours, load shifting schedules these activities to the middle of the night or early morning when its demand is low on the grid.
These two strategies can be supported by energy storage systems as they store energy during off-peak times and dispose of it during peak time.

When to Use Peak Shaving Over Load Shifting

The decision between peak shaving and load shifting depends on the application and situation. The energy demand profile, variability in electricity prices, and the flexibility of the loads are some of the factors that determine this.
When Peak Shaving Is Preferred:
  • High Demand Charges: Commercial and industrial customers are often charged demand charges calculated from their maximum active power consumption at any point during a billing interval. By storing energy to lower these peaks, huge cost savings can be made.
  • Rigid Loads: The best choice for operation processes that need to be on at all times and cannot be scheduled for off-peak hours is peak shaving, especially in cases such as manufacturing processing.
  • Integration of Renewable Energy Sources: Renewable sources of energy like solar or wind can be incorporated with peak shaving strategies. Any surplus energy that is produced during the day can be stored and consumed during peak evening hours.

Strategies for Peak Shaving

Peak shaving can be achieved using several approaches, each with unique benefits:
  • Battery Energy Storage Systems (BESS): Batteries store energy during low-demand periods and discharge it during peak times. BESS offers a direct and flexible strategy for peak shaving, ensuring critical loads remain operational without straining the grid.
  • On-Site Generation: Facilities that generate their own electricity, such as with natural gas generators or renewable sources, reduce grid reliance at times of peak demand.
  • Energy Efficiency Improvements: Upgrading to more efficient equipment, better insulation, or streamlining operation inherently can shave peaks by lowering aggregate energy demand.
  • Demand Response Programs: Utilities incentivize users to decrease their energy usage at times of peak by offering them monetary rewards or bill discounts.

Battery Energy Storage for Peak Shaving

Peak shaving technologies rely on the storing of energy in off-peak hours and subsequent release in peak hours. Such technologies help to improve the stability of the grid, reduce dependency on peak-hour electricity, and offer huge savings in terms of cost. In this context, BESS will be beneficial to commercial facilities having high demand charges.
BESS is fed back into the grid during peaking hours. This improves the stability of the grid. It has been adopted by many locations all over the globe in order to make the power grid more reliable.

Cost Savings Through Peak Shaving

This leaves much room for cost savings in peak shaving, especially in high-power demand operations such as DC fast electric vehicle charging stations. By installing BESS, the stations avoid pulling power from the grid at times of high usage, thereby reducing demand charges and maintaining a steady, reliable supply of power.
A number of variables determine the amount of savings that can be realized:
  • Electric Charge: Demand charges are very high, or prices fluctuate frequently.
  • Size and Efficiency of the System: The bigger, more efficient the BESS is, the more energy it will store and deploy, hence greater savings.
  • Shape of the Consumption Profile: Those facilities that experience a more prominent peak in demand will be saved much.
The ROI and payback period of a BESS can be calculated through a comprehensive cost analysis. This includes investment and maintenance costs.

Loads That Are Suitable for Peak Shaving

Certain loads are well suited for peak shaving. They have high power draws and can adjust operations. Some of the best examples of such loads are as follows:
  • Electric Vehicle Charging Stations: High-power DC fast chargers tend to put a strain on the grid, but BESS can manage the demand during peak times.
  • HVAC Systems: The heating, ventilation, and air conditioning systems of large facilities can optimize their operations to reduce peak demand.
  • Industrial Processes: Peak shaving is utilized in the most energy-intensive processes, for example, manufacturing, data centers, or chemical plants.
  • Energy-Intensive Appliances: Water heaters, refrigeration units, and pool pumps are the types of devices that can be scheduled to avoid peak periods.

Peak electricity demand management is an urgent issue in the changing energy landscape of today. The consumption of electricity worldwide is expected to rise in the coming years. Utilities often face peak-hour power consumption, which causes stress on the grid, forcing them to invest in costly infrastructure upgrades and resulting in increased power outages and blackouts. One such popular solution that is being implemented is peak shaving.

As energy demand continues to grow, and renewable sources begin to find their way into the grid, such strategies as peak shaving will rapidly become a lifeline for enabling the grid to self-balance. Battery energy storage is the real, flexible, scalable solution, enabling stability on the grid, promoting renewable integration, and lowering the cost of electricity. They are critical for a sustainable net-zero energy future.

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