What Are Demand Charges?

The meter records the peak amount of power drawn over a short interval, and the utility bills that peak at a set price per kilowatt on top of the ordinary energy charge. Some tariffs measure the peak only within certain hours, and some carry a ratchet that keeps one high month’s peak on the bill for several months afterward. A single burst, such as several large machines starting together, can set the whole month’s charge.

Solar changes the energy line far more than the demand line. A cloudy afternoon or an evening spike can set the monthly peak at a moment when the array is producing little, so panels alone may barely move the charge. Batteries that cap the peak, or controls that stagger large loads, are the usual tools. Commercial appointments live or die on this, while residential ones matter only in territories with demand-based plans.

Reps often promise a near-zero bill from a system sized to total kilowatt-hours; where demand charges apply, that number may never be reachable. Another slip is confusing demand charges with a fixed monthly customer fee, which does not vary with use, or with time-of-use pricing, which prices energy by the hour but does not bill a peak. The bill’s line items reveal which one the account actually has.