What is peak shaving?

Our power-grid is getting increasingly complex, while the infrastructure in place is insufficient to support our modern generation and consumption behavior. While the electrification of transportation, industry and overall lifestyle is an important step toward a climate neutral future, it provides challenges such as ways for efficient peak shaving that need to be addressed by investments in and extension of existing infrastructure and technologies.

  1. Understanding Peak Shaving: What it is and How it works
  2. Strategies for reducing peak loads: Techniques and Tools for Reducing Energy Costs
  3. Why Peak Shaving is Important for Efficient Energy Management and its Growth
  4. The Future of Peak Shaving: Advancements in Technology and Sustainable Solutions
  5. Conclusion

Understanding Peak Shaving: What it is and How it works

Electricity flows at all times. However, how much of it is needed varies throughout the day but also throughout seasons. During times of peak demand, the strain on the public grid is higher than usually and additional resources have to be utilized to handle this extra demand. This can mean turning on highly reactive generators such as gas-peaker-plants to match supply and demand.

Why do we need to match supply and demand?

Our supply of electricity and its stability is dependent on the match between it’s demand and supply. The two are not a mere economic principle. In the power grid, a mismatch can lead to lead to blackouts, brownouts, or voltage fluctuations. Those can damage electrical equipment connected to the grid.

In case of demand exceeding supply, the voltage is going to drop, causing appliances to operate less efficient and eventually causing an outage. If the supply exceeds the demand, the voltage is going to increase, causing damage to electrical equipment and posing a safety risk to grid related works.

The solution: Peak Shaving

Peak shaving is a strategy in energy management for reducing the amount of electricity consumed during times in which demand exceeds supply. Those times are also called ”peak periods”. Peak periods are usually happening during the day when both, businesses and private households, use energy. They can also occur when extreme weather conditions force consumers to use more energy for cooling or heating. Peak shaving reduces the strain on the grid and shields it from damage during those periods.

Strategies for reducing peak loads: Techniques and Tools for Reducing Energy Costs

There are multiple ways to manage peak demand. Some of them involve usage of technologies while others focus more on the management of time-of-use.

1. Load shifting

This involves shifting the time of energy use from peak periods to off-peak periods. For example, a company might schedule its manufacturing processes to occur during the night, when electricity demand is lower. Load shifting is a simple scheduling response to demand times. Trough it, energy consumption is moved from peak periods to off-peak periods, reducing the strain on the grid. An example is a manufacturing company scheduling the production process more towards the night, when demand for electricity is generally lower. Obviously, this is not always possible or economic.

2. Demand response

Demand response is a program which incentives electricity consumers to reduce their consumption during peak demand periods. Usually the incentives are financial or in form or electricity credits on the bills. Utility companies communicate the start and end of those peak demand times in order for consumers to adjust their behavior.

3. Energy efficiency

Consumers can install more energy efficient devices and smart energy management systems. They can be coupled to demand response programs to reduce usage of electricity during peak periods. A simple example are programmable HVAC or LED systems. To further decrease the consumption during peak periods a power factor correction can be done.

The power factor is the ratio of real power (the power used to perform work) to apparent power (the total power consumed by the equipment). Electrical equipment with a low power factor can consume more energy than necessary, which can lead to higher electricity bills and contribute to grid instability during peak periods. By correcting the power factor, the efficiency of the electrical equipment improves, leading to lower energy consumption.

4. Energy storage

Storing energy during time of low demand for peak times is an effective way to reduce peak loads. The storage happens trough flywheels, compressed air storage or Battery Energy Storage Systems (BESS). On a consumer scale a BESS can help your business to do the same. Energy from a PV-system charge the battery during off-peak hours. The battery system then discharges automatically at peak times, reducing the strain on the grid, obeying to demand response schedules and reducing peak demand charges on the electricity bill. A smart energy management software handles the automatic discharge. It can also learn from data of past usage and optimize charging and discharging times further.

If you want to get more information and learn how our battery solutions can help your business with peak load charges and demand response, you can get in touch here.

Peak shaving with a battery storage explanatory graphic

Why Peak Shaving is Important for Efficient Energy Management and its Growth

Incentivizing consumers trough demand response programs or charging fees for peak demand charges can lead to investments in energy efficiency technologies. The investments from consumer side in technologies such as BESS, HVAC or energy management software lead to an overall more efficient usage of energy, but also to a more distributed demand throughout different time-periods.

The Future of Peak Shaving: Advancements in Technology and Sustainable Solutions

Peak shaving is highly benefiting from advancements in technology. With battery storage becoming more developed more economically viable options are available to utilities and consumers. The integration of those battery energy storage solutions links to smart energy management systems. Those systems are automatically shifting loads, processing demand response schedules and engage battery storage units. Improvements in technologies such as AI and Blockchain further expand possibilities for new business models and peak shaving solutions.

With those technologies becoming more sophisticated and tested in real world settings, energy communities and smart grids become more attainable. Having less consumers depending on a single grid infrastructure will reduce strain on the grid and foster more energy efficiency due to local production and consumption.


Peak shaving is an integral part of a modern energy infrastructure. Strategies such as energy storage systems, demand response and smart management software will play a crucial role in allowing us to shift towards a renewable energy backed energy infrastructure.


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