Demand Charge Estimator

What each input means

Monthly peak demand (kW) is the highest average power draw in a single billing interval, usually 15 or 30 minutes [nrel-demand-charge-survey]. Santee Cooper, like many utilities, bills on the maximum 30-minute interval in the period [santee-cooper-demand]. On a grow bill this is often set the first minute all flower rooms hit photoperiod together.

Average demand (kW) is monthly kWh divided by hours in the billing period. For a rough figure, divide monthly kWh by about 730 hours. Average demand is always lower than peak demand in a cultivation facility because lights cycle and HVAC modulates.

Demand rate ($/kW) is the tariff price applied to billed demand. NREL's survey found commercial demand charges ranging widely by utility, and demand can represent 30 to 70 percent of a commercial bill [nrel-demand-charge-survey]. Copy the rate from your tariff or bill, not from a national average.

Ratchet (% of annual peak) is optional. Many tariffs set billing demand at the greater of this month's measured peak or a percentage of the highest peak in the prior 11 months. If your bill shows a demand figure higher than any interval you measured this month, a ratchet is likely in play. When you know your ratchet-adjusted billing demand, enter that number directly in the peak field and leave ratchet at zero.

Peak reduction to model (%) lets you test a scheduling change. Staggering light schedules and HVAC starts commonly cuts peaks 10 to 25 percent without changing total kWh.

The math step by step

Output	Formula	Example (500 kW peak, 320 kW average, $14/kW, 15% shave)
Billed demand	max(peak kW, ratchet adjustment)	500 kW with ratchet at 0
Monthly demand charge	billed kW × $/kW	500 × 14 = $7,000/month
Annual demand cost	monthly × 12	$84,000/year
Load factor	(average kW ÷ peak kW) × 100	(320 ÷ 500) × 100 = 64%
Peak after shave	peak × (1 − shave% ÷ 100)	500 × 0.85 = 425 kW
Monthly savings from shave	(peak − shaved peak) × $/kW	75 × 14 = $1,050/month

Load factor below 50 percent flags a peak far above average use, which is typical when lighting is 66 percent of consumption and switches together [nwpcc-cannabis]. Above 50 percent suggests a flatter profile or a peak that already reflects some staggering.

The peak-reduction savings line applies the full demand rate to every kW removed. It does not model on-peak-only demand windows or partial ratchet relief.

Why grows care about this line item

Demand is a capacity charge: the utility sizes wires and transformers for your worst interval whether it lasts 15 minutes or all month [nrel-demand-charge-survey]. A facility that runs 320 kW on average but hits 500 kW when timers close pays for 500 kW of capacity even if that spike is brief.

Lighting drives the spike. In the Northwest survey, flowering rooms alone were 49 percent of total electricity [nwpcc-cannabis]. When every flower room shares a photoperiod, compressors and dehumidifiers stack on top of the lighting step. Read peak demand vs. peak usage for the distinction between nameplate and billed kW.

Assumptions and limits

• One flat demand rate. No split between distribution and transmission, no seasonal demand rates, no on-peak demand windows.
• Ratchet modeling is simplified. Enter ratchet-adjusted billing demand in the peak field when you know it.
• Peak shaving is modeled as a permanent reduction in billed kW, not a one-month anomaly.
• Savings ignore kWh effects. Staggering lights may slightly change HVAC run time; this tool holds energy use constant.
• Supply-side capacity charges in ISO markets (PJM, NYISO, ISO-NE) may appear on a supplier bill, not this utility demand line. See understanding your commercial utility bill.

For a full bill picture including kWh, pair this with the facility energy cost calculator. For how one operator restructured demand billing, see the Illinois craft grower case study. For deeper tariff mechanics, read demand charges explained.

Reading demand on different bill formats

Utilities label billed demand inconsistently. Search the bill for these strings:

Label	Meaning
Billed demand (kW)	The kW value multiplied by $/kW
Peak demand	Often the measured interval, may differ from billed if ratchet applies
Distribution demand	Delivery-side kW charge
Transmission demand	Regional grid charge, sometimes separate
Capacity tag	Supplier-side assignment in PJM, not always on utility bill

If two kW figures appear, the higher one is usually what you pay unless the tariff bills each component separately. Enter the total dollars divided by $/kW if you are unsure which kW row governs.

Interval data from AMI meters lets you recompute the highest 15- or 30-minute average yourself. Sort intervals for the billing month and compare to the bill. Mismatch flags a ratchet or a billing estimate.

Load factor: what the percentage tells you

Load factor compares average demand to peak demand. Cultivation facilities often land between 40 and 70 percent depending on stagger strategy.

Below 40 percent: peaks are far above average. Priority levers are schedule staggering, soft-start on HVAC, and avoiding simultaneous equipment tests during photoperiod.

40 to 60 percent: typical for multi-room indoor with partial overlap. Demand shaving of 10 to 15 percent is often achievable without production changes.

Above 70 percent: flat profile or already staggered. Further peak cuts may require capital (storage, separate service) rather than scheduling.

Load factor does not appear on your bill. It is a diagnostic you calculate from kWh and peak kW. Improving load factor lowers demand cost per kWh even when total kWh stays flat.

Peak shaving tactics that preserve kWh

The peak reduction field models permanent kW cuts. These operational changes commonly deliver them without reducing yield:

Stagger flower room offsets by 15 to 30 minutes. Lights still run 12 hours; intervals no longer stack.

Sequence HVAC and dehumidifier enable signals. Avoid full compressor starts in the same interval as lighting step.

Shift non-critical loads. CO2 burner ignition, irrigation pumps, and packaging lines can move off the photoperiod ramp.

Cap concurrent test loads. Engineering walk-downs that energize every circuit at once set peaks that persist on ratchet tariffs for months.

Review EV charging or kitchen loads on mixed-use meters. A dispensary with cultivation behind the same meter inherits retail peaks.

Demand response programs pay for curtailing load during grid events. They are separate from tariff demand but interact with production schedules.

Ratchets: when one bad month lasts all year

Ratchets set billing demand to a percentage of the highest peak in a prior window, often 8 to 12 months. A single August interval at 600 kW can bill 540 kW all winter if the ratchet is 90 percent, even when measured peaks are 400 kW.

The optional ratchet field in this tool is simplified. When you know billing demand exceeds measured peak, enter billing demand in the peak field and document the ratchet rule from your tariff.

Mitigation strategies include targeting ratchet reset months for maintenance shutdowns, splitting load across multiple meters with separate ratchets (where utility rules allow), and negotiating contract demand floors only when load is stable.

Pairing demand work with supply shopping

Supplier capacity charges in PJM and ISO-NE tie to your peak load contribution, not just utility distribution demand. Cutting peak kW can lower both utility and supplier lines over time, but capacity tags often lag measured peaks by months.

Run supply bids with honest peak forecasts. If you plan a 15 percent shave, tell suppliers in the RFP so capacity pass-through models match reality.

Compare total bill impact: demand savings plus any supply capacity credit. The supplier contract comparison worksheet handles supply arithmetic; this tool handles kW.

Limits recap for cultivators

Dehumidification and reheat can hold kW high even when lighting staggers. Envelope leaks force simultaneous cooling and reheat. Submetering rooms clarifies which zone sets the peak; see submetering multi-tenant cannabis buildings when you need allocation data for investors or regulators.

Monthly workflow for facility managers

Each billing cycle, record peak kW, average kW implied from kWh, demand dollars, and load factor from this tool. Plot a twelve-month trend. Spikes without production changes flag equipment faults, schedule drift, or ratchet resets worth investigating.

Share the trend with cultivation before blaming procurement. A new strain requiring different dehumidification can raise peaks without malicious intent.

When peak shaving tests run, compare the billing month peak to pre-test months. Document stagger offsets in SOPs so new head growers do not revert timers.

FAQ cluster demand charge questions collects operator phrasing we hear on calls; use it when training staff who read bills for the first time.

Treat demand dollars as a monthly budget line equal to peak kW times your tariff rate until you prove otherwise with interval tests. Finance can forecast demand separately from kWh when growers publish stagger experiments.