Demand Charge Guide

Under capacity-based distribution tariffs, the distribution system operator bills based on the highest average power recorded during the month, typically measured in 15-minute intervals. Total energy consumed plays no role here: two sites with identical monthly consumption can have drastically different bills depending on how sharply their load peaks.

Tariff sheets from distribution operators show typical rates: the tariffs we analysed feature a demand-based charge ranging from €1.37 to €5.97/month/kW. For example, for a 100 kW peak, the monthly charge ranges from €137 to €597, and for a 300 kW peak, from €411 to €1,791.

Many commercial tariffs also include a fixed standing charge and a volumetric distribution fee per kWh, making the demand charge just one component of the bill. Electricity tax is either 2.325 c/kWh (Class 1) or 0.135 c/kWh (Class 2), excluding VAT.

The most common sources of peaks are machine and motor start-ups, simultaneous starts of compressors and cooling equipment, switching on heating elements, air conditioning, and loads accumulating in the morning and afternoon. The balance between solar generation and consumption can also create a peak if the property draws power from the grid precisely when generation is at its lowest.

Before sizing a battery, it is essential to examine actual metering data: when the peak occurs, how long it lasts, and whether it recurs daily. According to Motiva's recommendation, an industrial energy audit is this first step.

The battery monitors the site's power demand and discharges into consumption when the load exceeds a set threshold. When the limit is set at, for example, 80% of the measured peak, the battery covers the excess. As a result, the month's measured peak does not exceed the threshold, and the demand charge is determined by the lower value.

In practice, the battery does not need enough power to cover the entire peak. A smaller battery reduces the peak correspondingly less, but the investment is lower. The battery's capacity determines how long a peak it can sustain: the longer the peak, the more stored energy is required.

Consider a site with a measured monthly peak of 250 kW. If the battery's power output is 100 kW and it covers the excess, the monthly peak remains at 150 kW.

The reduction in demand charges is 137–597 euros per month, or 1 644–7 164 euros per year, when the entire monthly peak can be shaved.

The figures are based on power-based tariff lists from distribution grid operators (Caruna Oy, Caruna Espoo Oy, Elenia) and are VAT 0% values. Actual savings depend on whether the peak recurs every month and what proportion of it the battery manages to cover.

In addition to demand charges, the battery can deliver savings on the consumption component of distribution tariffs and spot electricity price differentials. These should be calculated separately, as their predictability varies.

Peak shaving does not work if the peak is very brief, sporadic, or occurs when the battery is depleted. This is why battery sizing is based on measured load profiles, not estimates. In addition, it must be ensured that the battery does not create a new peak while charging: charging is typically scheduled outside peak load hours.

Electricity tax classification should be verified separately. Tax Class 2 has strict eligibility criteria and is only granted for specific applications, so calculations should not rely on it without confirmation.