Demand charge savings from commercial solar depend critically on specifics of the demand charge design. For most commercial building types and locations, demand charge savings under a basic, non-coincident demand charge design are minimal. As the study found in the analysis of residential demand charges, savings on demand charges can be more substantial when the demand charge is instead based on peak periods in early and mid-afternoon hours, as seen in Figure 1.
There can be significant differences in demand charge savings for various commercial building types. Commercial building types which tend to have evening peak loads, such as hotels and apartment buildings, have near-zero demand charge savings from solar under a non-coincident demand charge design. On the opposing end of the spectrum, building types which tend to have afternoon peaking loads, such as schools or office buildings, tend to have the highest demand charge reductions as their peak load can often be offset by solar PV generation under the same non-coincident demand charge. The differences among building types are not as stark when the demand charge is defined over a peak period.
PV system size drives demand charge savings, but with diminishing returns. Intuitively, larger PV systems have higher demand charge savings, but each incremental kW of PV system size is less effective at reducing the demand charge, for all demand charge designs considered.
News item from Berkeley Lab
TIM SONDER says
Where were the study participants? One hot and humid, cloudy day in summer per month is all it takes to have zero savings in demand. In northern Illinois, we are charged based on the highest usage for 30 minutes within the billing month at peak (morning through afternoon) hours. Heavy use of equipment or HVAC when the sun isn’t shining in one half hour is all it takes. Summer months, we have zero kWh, but high demand charges.