Peak Shaving

Peak Shaving is a strategy in finance where individuals or businesses try to reduce their highest levels of electricity usage during peak times, usually by shifting some activities to off-peak hours or by using energy storage systems. The goal is to lower overall energy costs by avoiding expensive peak demand charges.

Example #1

For example, a manufacturing plant may choose to schedule heavy machinery operation during off-peak hours to reduce electricity costs during peak times.

Example #2

A homeowner may use battery storage to power their home during peak hours, reducing reliance on the grid and avoiding high rates.

Misuse

An example of misuse could be a utility company manipulating peak shaving to unfairly increase rates during peak hours without offering consumers alternative options. This could lead to consumers paying more without receiving transparent information about the reasons behind the rate hikes. It's crucial to protect against such misuse to ensure consumers are not exploited and have access to fair pricing structures.

Benefits

Peak Shaving can benefit consumers by helping them save money on their energy bills. By actively managing energy consumption during peak hours, individuals and businesses can avoid costly peak demand charges, leading to more predictable and potentially lower electricity costs.

Conclusion

Peak Shaving, when used ethically, can empower consumers to take control of their energy usage and expenses. By understanding and actively managing peak energy consumption, individuals and businesses can contribute to a more sustainable and cost-effective energy system.