Electricity Bill - Peak Power 6

[jdogg05]

I was talking to the electrical superintendent at my work. He was talking about VFDs and how they reduce your energy bill because they ramp up the current slowly rather than just applying full power right away. I was then told that this is how energy companies actually bill you: based on your PEAK power during any billing cycle... I don't understand how or why this is? Can someone explain this to me?

 

[PHovnanian]

Many utilities have what they call a demand charge that they apply in addition to energy charges. These are based upon the maximum power drawn (kilowatts), calculated by integrating the energy used (kilowatt-hours) over a specified time period (usually 15 minutes). These are most common on industrial and commercial accounts.

For very large motors, this might make sense. However, in most cases the energy needed to accelerate a motor is nearly constant. Extending this over a few more seconds with a VFD soft start scheme won't change the 15 minute integral significantly. What such soft start schemes do accomplish is to reduce the voltage dip on the plant electrical system due to motor starting as well as stresses on the motor, switchgear and other equipment.

 

[dpc]

In general there are three parts to a typical electric utility bill: Basic Service or Meter Charge, Energy charge, and demand charge. The basic service charge is fixed - the same amount every month. The energy charge is based on the energy used (kilowatt-hours). The demand charge is based on the peak power used during the billing cycle. The peak power is based on the maximum average power used during a demand interval - this is typically 15 min, 30 min or 60 min, depending on your utility and your rate.

And your superintendent is wrong. If the VFD is saving you any money, it is not going to be due to a reduction in demand charge.

 

[jdogg05]

Awesome, thank you for the explanations. What is the logic behind this demand charge. Why does your average peak power affect the utility companies?

 

[dpc]

Because electricity can't be stored. Their entire infrastructure has to be built to be able to supply their system peak demand and every customer's peak demand. If your peak is three times your average demand, they would have to charge much more for the energy used if there was no demand charge.

 

[DRWeig]

I'll expand on dpc's post a bit. If your demand (peak) is three times the average, the utility had to install capacity for that peak. It's their capital cost that goes up, and they recover it with demand charges.

Best to you,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies

 

[jraef]

Or looking at it another way, if on occasion you use a very high peak of energy, but not all the time, they must supply the infrastructure CAPABLE of supplying that peak energy to you. But if they are only charging you for average energy, they would have to charge you, and everyone else, more to cover the cost of keeping that peak capacity in reserve and available at all times. So instead, they only charge those that USE the peaks.

Conversely, some are also now offering discounts in some areas for those who shift their peak energy use to off-peak times, such as at night, so that they have more capacity available to supply all the ACs running on hot days. That's going on here where I live. From 7PM to 7AM, we pay roughly 1/3 of the rate we pay from 7AM to 7PM (I think, I'm not looking it up right now).

"Will work for (the memory of) salami"

 

[dpc]

Many utilities have a "ratchet" in the demand charge - charging for the highest peak demand of the preceding 12 months, not the current month's demand.

 

[jraef]

Oh and I'll chime in that Yes, your superintendent has likely been duped by the less-than-scrupulous salesmen out there telling people whatever they want to hear regarding VFDs and Soft Starters. They do NOT save on peak demand charges. VFDs do save actual energy if they can replace some OTHER form of flow control on centrifugal loads. they also can allow heavy loads to accelerate at very low (relative) currents, which can be very beneficial in applications with severe limitations in starting power. But this does not directly relate to billing issues.

"Will work for (the memory of) salami"

 

[LionelHutz]

As already posted, most motor starts will not impact the demand enough to be significant. The demand is typically the average kW or kVA drawn over a 15 minute window. Typically, I see the utility measuring the 15 minute average kW and kVA and then using the larger of the kW or the kVA*0.8 to bill for the demand. I have never seen a peak only demand charge which didn't use the 15 minute averaging window.

Most motors which only take a few seconds to start won't cause a significant increase in the demand. An exception could be a very difficult to start motor which is by far the largest load in your plant.

Your VFD is likely costing you rather then saving if this peak savings was the reason for installation. Sadly, there are so many that believe installing a VFD automatically means you save energy yet in many cases it simply is not true. Various goverment bodies which will hand out grant money if you install a VFD have made the energy savings misunderstandings even worse. If your VFD just runs to full speed (or any other constant speed) then it's costing you energy.

 

[jraef]

I've been on a road show this past two months teaching a class I call "VFD-101" for people who have to deal with VFDs in ther work, but are ignorant of how they work and what they are (and are NOT) capable of. That last point by Lionel is, unfortunately, proving to be very true. In every class, when I explain to the attendees that putting in a VFD does NOT automatically save energy, and in fact if operated at a constant speed, actually WASTSES energy, there is always a detectable groan from the audience. Afterward I am hearing some sad stories about how unscrupulous salesmen are pushing VFDs as panacea solutions to energy woes.

"Will work for (the memory of) salami"

 

[X49]

VFD's can reduce demand charges somewhat, if the utility calculates demand charges based on kVA demand. However this is because of improved power factor, not reduced inrush current.

A VFD with will typically have a power factor of 96-98%, whereas without a VFD, the power factor of a motor would be in the 80-85% range. Energy loss in the VFD will reduce this power factor benefit somewhat though.

The other way in which VFD's can reduce demand charges is when they allow the motor to run at reduced speed/reduced power throughout the entire billing period. This may be the case for motor loads with seasonal power demands for instance.

All this being said, I would never install a drive simply to reduce demand charges. There should be a compelling reason from an energy savings and/or system operation perspective to justify a using a drive.

 

[dpc]

X49,

In theory you are correct, but demand charges based on kVA are fairly rare, at least in my experience. Also, you are assuming that no other power factor correction is being applied to the constant speed motor.

 

[bacon4life]

Although it may be rare, my utility calculates a ratcheted demand charge based on kVA. Using a kW demand charge with separate power factor penalty would provide clearer cost allocation.

We have one customer that uses leading VFDs in their container cranes to offset low power factor on their refrigerated container service. Their peak 10 second demand is about 8MW when all the cranes are lifting. Their demand charge is only about 2 MW based on using a 15 minute window (rather than having anything to do with VFDs changing peak demand).

Mark Pigman
Tacoma Power

 

[tinfoil]

Many POCO jurisdictions DO bill on KVA if the power factor is poor.

For example, many utilities here in Canada charge the GREATER of 100% of peak KW or 90% of peak kVA.

So if your peak p.f. is better than 0.90, no 'kVA' or power factor penalty.
If your peak power factor drops below 0.90, then you will be paying a higher demand charge even if you are not benefiting from any extra kW.
This incents businesses to invest in power factor correction, saving EVERYBODY in infrastructure costs.

 

[tinfoil]

(wish I could just edit prior post)

If you think about it, the demand charge (even with the annual 'ratchet') makes sense. The utilities have to provide enough 'stuff' to handle your worst demand all year even if you only use it for one hour.

This includes your service wire, distribution transformer, power lines radiating from the substation, the size of the substation itself, the transmission network, and the generation plants. Or at least a tiny fraction of each.

 

[dpc]

The ratchet makes sense - that's why it's allowed by the PUCs. Using KVA for demand charge can serve as a power factor charge in addition to the demand charge. Using kW for demand is probably more historical than logical and is maybe related to the options available in induction disk WHM.

 

[jraef]

Being ratcheting and being based on a demand window are not mutually exclusive. In fact that is usually the case: the highest demand window is the ratcheted peak until the meter reader resets it. but still, a SINGLE short even within that window has a very negligible effect on the peak demand as it is metered.

What is extremely rare is an ratcheting INSTANTANEOUS demand meter. I have never seen one but I have heard plenty of anecdotal references to their existence. I once posted a question in this forum years ago asking for corroborating evidence, I got nothing. I'll repeat it now. If anyone KNOWS that their utility uses a ratcheting INSTANTANEOUS demand meter, please let me know who it is and I would like to get backup information from that utility. I personally believe this is an urban myth that is used by people trying to sell solutions to a problem that does not really exist.

"Will work for (the memory of) salami"

 

[paliha]

The power factor we measureement with standard PF meter makes use of displacement of voltage and current phases, and when we measure PF with such meter, we observe good power factor for VFD drive. Or even leading PF due to the DC bus capacitors. However due to the harmonic currents generated by the VFD, the true PF of a VFD load is very low. 0.8 is a difficult figure even with harmonic filters. Good PF with VFD is one more misconception associated with VFD.

 

[LionelHutz]

X49 - I typically consider displaced power factor to only be useful to the marketing people. I also typically see the utility metering the kW and the kVA and then calculating the real power factor. The real power factor of a VFD with a reactor is a little better then the real power factor of a decent motor running under across the line. A capacitor on the motor can fix the power fator and is cheaper then a VFD.

dpc - it's a regional thing. I have seen bills from many utilities in Canada and a few bills from utilites in the USA and they all charge demand based on the larger of 0.9 x demand KVA or demand KW. The most typical is a 15 minute window. I had wrote 80% before but read tinfoils post and would agree with 90%. If they charged by kW demand only then there would be no incentive to correct the power factor.