top of page

Peak Shaving

Updated: Nov 19, 2022

What is peak shaving and why is it important?

Peak shaving is a technique used to even out spikes in electricity consumption. So why is this important, well power consumption peaks can cause problems with grid stability and therefore also increase the electricity cost, thus for companies and consumers it is interesting to manage these peaks effectively.

Why are electricity prices higher during the peaks?

Well, grid operators don’t like it when there are sudden fluctuations in power usage. As they have to design and balance the grid based on the maximum amount of power that will be needed. This means that the everyday operation of many industrial companies — such as powering up or increasing a production process — can cause fluctuating loads on the grid, which can be especially problematic in combination with unpredictable renewable energy resources.

So by reducing power consumption during times of high demand ("peak shaving") consumers can help avoid spikes in costs, but also enable grid stability. There are many ways to peak shave your energy loads, but the easiest are to temporarily scale down your home appliances or relying on a buffer system, such as a battery.

How can peak shaving save you money?

While peak shaving may not seem like a big deal, it can actually save you a significant amount of money on your electricity bill. When demand for electricity is high, utilities must generate more power to meet that demand. This results in higher prices for everyone. By shaving your peak load, you're reducing the overall demand and helping to keep prices down for everyone.

In order to motivate the Flemish consum

ers to lower their peak loads the Flemish government has decided to introduce a capacity tax (“capaciteitstarief”), which means they’ll charge you when your electricity usage goes above 2.5 kW.

So what will be the impact of the capacity tax?

For the calculations we based ourselves on a typical small Flemish household with two working people with a total energy consumption of 2.944kWh a year and an average peak load of 3.98kW.

We simulated that in a normal situation and without peak shaving the tax would be 221€ a year.

But by introducing energy storage of 1,5kWh in the system, a buffer is created which can facilitate the peak shaving mechanism and reduce this tax.

  • Consequently we simulated that if the peak is reduced by 500W the tax would be 193€ and the consumer can save 28€ a year.

  • Then if the peak would reduced by 1000W, the tax would only be 165€ and would save the consumer 56 € a year.

  • With a maximum reduction of 1500W the tax would be 139€ and would save the consumer 82€ a year.

These results show that the peak shaving algorithm plays a big role in optimizing the tax reduction, and in order to ensure maximum returns accurate real time data is needed, in the form of a digital meter or similar sensing device.

What are the benefits of peak shaving beyond saving money?

There are also some positive side effect of peak shaving, peak shaving helps reducing blackouts and brownouts, which are caused when demand exceeds supply. So by reducing your electricity usage during these times of high demand, you’re helping to prevent these outages from happening.

And secondly it is also good for the environment because it reduces your carbon footprint and helps preserve our planet for future generations.

In a nutshell

So there you have it, three great reasons to start peak shaving your electricity loads today! Not only will you save money and help the environment, but you can also begin contributing to energy stability. Do you want to do your own calculations then check out VREG's online simulator.


bottom of page