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Understanding exactly what peak demand charges are, how they鈥檙e calculated, and what you can do to reduce or eliminate them, can be confusing.

Believe it or not, your energy utility鈥檚 peak demand charges account for up to 70% of your company鈥檚 energy bill.

The good news is, there are ways to reduce or even eliminate those charges.

Here鈥檚 the difference between the two types of charges on your company鈥檚 monthly energy bill:

• Consumption charges are the total amount of energy in kilowatt-hours (kWh) used, multiplied by your utility鈥檚 cost per kilowatt-hour for this energy ($/kWh). This is your company鈥檚 total energy use during the billing period.
• Demand charges, which account for 25-70% of monthly energy costs for commercial and industrial businesses, are based on 鈥渢ime of use鈥� pricing. Your utility provider charges your company more for energy used during times of peak demand鈥攆or example, during summer daylight hours when most businesses are in full operation.

How To Reduce Peak Demand Charges

One effective way to significantly reduce peak demand charges is through the use of on-site power. Simply put, distributed generation or on-site power is non-grid supplied power that is instead produced at the site of your business. On-site power generation options, such as Combined Heat and Power (CHP) and solar, can generate a significant share of a facility鈥檚 power needs, reducing the risk of utility pricing volatility (like peak demand charges) and providing long-term savings in electricity costs.

By generating your own on-site power during peak demand periods, you can meet your facility鈥檚 energy needs and offset鈥攐r even eliminate鈥攖he amount of energy your facility draws from your local utility during these peak demand periods.

GEM Energy is an on-site power resource for all types of organizations. For those who are ready to explore this efficient and reliable source of energy, on-site power engineers are available for consultations.

to learn more about how to reduce or eliminate peak demand charges on your company鈥檚 energy bill.

For more information or to talk with an on-site energy solution expert, call 866.720.2700 or email onsitepower@gogemenergy.com.