Battery Peak Shaving Savings Calculator

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Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Current billing peak: The highest demand, in kW, used to set the demand charge for the bill period.

Demand charge rate: The price charged for each kW of billing peak, usually shown as $ per kW-month.

Battery power limit: The most kW the battery can deliver at one time during the peak event.

Usable battery energy: The kWh the battery can actually deliver after reserve and operating limits.

Peak event length: The number of hours the battery must discharge to reduce the high-demand period.

Round-trip efficiency: The percent of recharge energy that comes back out of the battery.

Feasible peak cut from battery: The kW reduction allowed by the smaller limit: battery power, usable energy over time, or the current peak itself.

Battery gap for planned target: The extra kW of peak cut needed to reach the Planned peak target. A zero gap means the target is feasible under the entered limits.

Simple payback period: Installed battery cost after incentives divided by Annual savings after battery losses.

Mistake: Entering an energy rate in Demand charge rate, such as 0.12 $ per kWh.
Fix: Use the bill line item for Demand charge rate in $ per kW-month.

Mistake: Using total battery capacity for Usable battery energy.
Fix: Enter the deliverable Usable battery energy after reserve and depth-of-discharge limits.

Mistake: Setting Peak event length too short because the bill shows only one peak number.
Fix: Estimate how long the high load lasts; a longer Peak event length can lower Feasible peak cut from battery.

Mistake: Expecting Planned peak target to change the savings by itself.
Fix: Savings use Battery-limited billing peak; Planned peak target only checks Battery gap for planned target.

Mistake: Leaving Round-trip efficiency at 100 percent for a rough real-world estimate.
Fix: Use the battery quote or a realistic Round-trip efficiency so Annual cost of battery losses is included.

Mistake: Reading Simple payback period as a full project finance result.
Fix: Treat Simple payback period as Installed battery cost after incentives divided by Annual savings after battery losses, before financing, maintenance, degradation, and tax effects.

• The calculator uses one billing peak, one Demand charge rate, and one Peak event length. It does not model full interval data, dispatch schedules, or separate weekday and weekend peaks.
• It assumes the battery can hold a flat discharge equal to the Feasible peak cut from battery for the whole Peak event length.
• It does not model demand ratchets, seasonal tariffs, time-varying demand charges, standby charges, or multiple demand charge line items.
• Annual savings after battery losses subtracts only the added recharge energy from round-trip losses. It does not include maintenance, battery degradation, taxes, financing, replacement, demand response revenue, or solar charging effects.
• Months per year this peak is reduced is a simple count from 0 to 12. If the site has different peaks in different months, run separate cases.
• Simple payback period is shown as N/A when Annual savings after battery losses is zero or negative, because dividing by zero or showing a negative payback would not be useful.

How the peak cut is found

The calculator first finds the largest peak cut the battery can actually support. This avoids counting savings from a target the battery cannot reach. Battery management for bill savings depends on demand limits and battery operating limits, not only on the desired target [2].

feasible_peak_cut_kw = min(current_peak_kw, battery_power_kw, usable_energy_kwh / peak_event_hours)

new_billing_peak_kw = current_peak_kw - feasible_peak_cut_kw

How savings are estimated

Demand-charge savings are based on the feasible kW reduction and the entered $ per kW-month rate. Battery loss cost is estimated from round-trip efficiency and the price paid to recharge the battery.

monthly_demand_charge_savings = feasible_peak_cut_kw * demand_charge_rate

efficiency_decimal = round_trip_efficiency_percent / 100

energy_delivered_per_peak = feasible_peak_cut_kw * peak_event_hours

annual_recharge_loss_cost = ((energy_delivered_per_peak / efficiency_decimal) - energy_delivered_per_peak) * recharge_energy_price * peak_months_per_year

annual_savings_after_losses = monthly_demand_charge_savings * peak_months_per_year - annual_recharge_loss_cost

Target gap and payback

The planned target check compares the battery-limited peak with the target peak. A positive gap means the planned target needs more peak cut than the battery can supply with the entered power and energy limits.

battery_gap_for_planned_target_kw = max(0, new_billing_peak_kw - planned_peak_target_kw)

simple_payback_years = installed_battery_cost / annual_savings_after_losses

Simple payback is shown only when Installed battery cost after incentives is positive and Annual savings after battery losses is positive.

Worked mini-example

Suppose Current billing peak is 500 kW, Demand charge rate is $20 per kW-month, Battery power limit is 100 kW, Usable battery energy is 300 kWh, and Peak event length is 2 hours. The energy-based limit is 300 / 2 = 150 kW, so the feasible peak cut is the smaller value, 100 kW. The Battery-limited billing peak is 500 - 100 = 400 kW, and Monthly demand-charge savings before losses is 100 * $20 = $2,000. With 90 percent Round-trip efficiency, $0.10 per kWh Recharge energy price, and 12 Months per year this peak is reduced, Annual cost of battery losses is about $26.67. Annual savings after battery losses is $24,000 - $26.67 = $23,973.33. If Installed battery cost after incentives is $150,000, Simple payback period is about 6.26 years. If Planned peak target is 400 kW, Battery gap for planned target is 0 kW.