DER VET User Guide/Services/Demand Charge Management

This refers to a service offered by DERs or other measures to reduce the demand charge portion of a customer’s electric bill. A demand charge is a charge levied proportionally to the peak customer demand each month. They can take several structures, including time-related charges associated with demand during particular hours of the month and/or season, and facilities-related charges which are assigned to the highest demand hours in the month or other billing cycle.

1. Optimization Details

This service applies no constraints and modifies the objective function of the optimization problem by adding a new term for each month and each demand charge that applies in the month. These terms take the form of max(Applicable Net Load) * Demand Rate where the Applicable Net Load is the net load at the POI (including DER power) for all hours in the month that the demand charge applies to.

For example, if a demand charge only applies to on-peak hours on weekdays, then max(Applicable Net Load) will be the peak demand only during on-peak hours on weekdays.