Berkeley Lab and the National Renewable Energy Laboratory (NREL) released a new study, Exploring Demand Charge Savings from Commercial Solar. This study is the second in a series addressing demand charge reductions from solar photovoltaic systems. It focuses specifically on commercial customer demand charges and follows an earlier studyabout residential demand charges.

Commercial retail electricity rates commonly include a demand charge component, based on the customer’s demand level in kilowatts (kW). Customer-sited solar photovoltaics (PV) can potentially reduce the demand charge, depending on the customer load profile and the demand charge design. Berkeley Lab and NREL are collaborating on a series of studies to better understand how solar PV can reduce demand charge levels for a variety of customer types and demand charge designs. In particular, the study seeks to understand to what extent and under which conditions rooftop solar can reduce commercial demand charges.

To answer these questions, the parties simulated demand charge savings for a broad range of commercial customer groups demand charge designs, locations in the United States, and PV system characteristics.

Some key findings include:
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.