How to Calculate BESS Savings from Maximum Demand Charges
BESS reduces maximum demand charges through peak shaving — and the savings can be estimated from the demand reduction multiplied by the demand-charge rate, then refined with load-profile data, degradation and the tax incentive.
The basic formula
A simple maximum-demand savings formula is: Monthly savings = Demand reduction (kW) × Demand charge rate (RM/kW). Reducing the peak by a few hundred kW at the prevailing RM/kW demand-charge rate produces a monthly saving that adds up over the year. This is only the demand-charge saving — a full case may also include solar optimisation, energy arbitrage, reliability value and the tax incentive. Solunar models the RM savings per site rather than quoting a fixed figure.
Step-by-step calculation
A proper estimate follows a clear sequence:
- Review 12 months of electricity bills — highest and average maximum demand, seasonal pattern, spikes and the demand-charge rate
- Analyse the load profile from interval data — when peaks happen and how long they last
- Estimate the target peak reduction — the expensive, repeatable peak
- Size the battery power (kW) to cover the target reduction plus margin
- Size the battery energy (kWh) for the required duration (e.g. 500 kW × 2 hours = 1,000 kWh)
- Include battery degradation, usable capacity, warranty limits and reserve margin
- Add the tax-incentive impact on tax-adjusted payback
What makes a good peak-shaving project
A good project usually has high demand charges, repeatable load peaks, a sufficient spread between peak and base load, good load-profile data, strong operating discipline, a reliable EMS, a clear battery warranty, strong O&M support, taxable income to use incentives, and bankable equipment and design.
Why EMS is critical
The EMS is the brain of the BESS — it decides when to charge and discharge. A weak EMS may miss the peak or discharge too early; a strong EMS can forecast demand, monitor the load curve and control the battery to reduce maximum demand effectively.
Important note
Disclaimer: Tax-incentive eligibility is subject to approval by the relevant authorities and the customer’s specific tax position, qualifying capital expenditure, timing, documentation and compliance requirements. Businesses should consult their tax adviser before making investment decisions.
Frequently Asked Questions
Multiply the demand reduction (kW) by the demand-charge rate, then refine with load-profile data, degradation and incentives.
Twelve months of bills, interval load data, operating schedule, solar data and the demand-charge rate.
No. The battery should match the site’s load profile and savings objective — oversizing weakens payback.
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