An Introduction to Demand Charges

This fact sheet contains background information on utility demand charges and the relationship and interaction between demand charge expenses and energy storage. Nearly all medium and large commercial customers in every state are obligated to pay demand charges. This includes traditional commercial customers, like private and nonprofit businesses, as well as a wide array of additional customer types such as community facilities, public buildings, and multifamily housing properties.

This fact sheet was written to accompany a white paper by Clean Energy Group and the National Renewable Energy Laboratory, “Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges.” The paper describes how millions of customers across the country may be subject to electric utility rate tariffs that include moderate to high demand charges, and suggests where opportunities may exist to reduce those charges with battery storage.