Electricity demand management, and what happens when you get it wrong

05 Mar 2015 by Peter

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For one commercial office building in Perth, Western Australia, recent hot weather led to a very brief, but very costly, spike in electricity use. How brief? 30 minutes on a Monday afternoon in January. How costly? Around $150K over 12 months.

This post discusses what went wrong and the lessons that can be learned for anyone trying to juggle the, sometimes competing, challenges of building performance and cost management.


Perth recently experienced an exceptionally warm January and this had major implications for the energy costs of some buildings.

Perth is used to the heat but even by their standards January was a scorcher with an average daily max temperature of 33°C making it the 6th warmest January on record. Of particular note was Monday January 5th, and it is this weather event, the impact it had on electricity demand, and associated costs, that will be the focus of the rest of this post.

Perth January 2015 max temperatures

Maximum daily temperatures across Perth for Jan 2015. Source: BOM


While the major theme of this post is pretty easy to grasp, the details are important and so it’s worthwhile having a quick refresher on electricity demand and why it matters to energy managers.

Demand is the rate at which you are using electricity and is often measured in kilowatts (kW), or kilovolt-amps (kVA). This is different to the quantity of electricity you have used in a period, which is measured in kilowatt-hours (kWh).

Your maximum demand drives the cost of the infrastructure required to meet your electricity supply requirements. If you improve energy efficiency and reduce the quantity of electricity you are using, but your maximum demand is still high, then those infrastructure costs will remain the same.

This is usually reflected in your electricity bill as one of a number of network charges. In some cases there will be an explicit demand charge on your bill (e.g. a rate per unit of max demand in the period), in other cases you may have a contracted maximum demand or CMD.

If you’re not seeing any network charges on your bill you’ve got what is known as a bundled tariff. In this case the network costs still exist, and they are still being recovered by your retailer in the form of higher energy costs, it’s just that they are bundled together with your energy (kWh) charges.


Often poorly understood, but always very important, the tariff is what turns your building’s energy performance into dollars and so represents a critical part of the cost management story. You can have the best energy management systems going around, but all that good work can be undone if you don’t understand how your buildings energy profile interacts with the tariff you’re on.

This is particularly true for demand related charges, where the tariff structures can be complex. Depending upon in which electricity network your buildings reside – there are about 16 in Australia – you are likely to be subject to a wide array of demand charges, get to know them and you greatly improve your chances of avoiding the fate of our protagonist.

The building that’s the subject of this post sits within the Western Power network and the network tariff that applies to it is known at RT6. The tariff is described in full here (PDF) but, to keep things simple, there are two key elements to the tariff that relate to demand costs:

  1. Charges are calculated by multiplying the half-hourly demand in kVA by a fixed charge based on demand tiers, from 0 to 300kVA, 300 to 1000kVA and 1000+kVA. Critically, charges increase significantly once demand exceeds 1000kVA
  2. The demand charge is calculated based on the 12-month rolling maximum for the building. This means that if you were to hit a new demand high water mark today, you pay for it until this time next year (or until you exceed it).


So with the scene set, let’s take a closer look at what occurred in this building on Monday Jan 5th.

  1. The temperature in Perth hit 44.4°C at 1:50pm making it the 3rd hottest January day on record.
  2. This led to significant additional demand on the electricity network as building HVAC systems struggled to keep temperatures comfortable. On the network as a whole this led to peak demand of around 3,804MW, around 40% higher than on a typical Perth summers day.
    IMO data for January 5th

    Energy demand on the SWIS the week beginning Jan 5th. Source: IMO

  3. For our building the effects were just as severe. As the graphic below shows, demand briefly peaked at 1,010KVA between 2pm and 2:30pm. To put this in perspective, demand for this building on a typical Perth summers day normally peaks at around 860kVA
  4. At 1,010kVA the building exceeded the 1000kVA demand threshold within the tariff meaning the fixed daily demand charge for the building increased from $235 to $637 – for the next 12 months. This means an additional cost of around $145,000 over that 12 month period.
  5. By 2:30pm, with moderating temperatures outside, electricity demand within the building began to fall. By about 4pm it was back to normal but the damage had been done.
Energy profile Jan 5th

Source: Greensense



This might sound obvious, but make sure you understand how your building behaves in different situations. If weather is the main driver of demand for your building, you should have a good idea of how your building will perform when the days get hot. You also need to understand the details of the tariff you’re on, and importantly what levers you can pull to manage your electricity cost.

Data is your friend here. If you have enough good quality historical data on the demand needs of your building over different weather conditions then you can start to understand how events, such as those that occurred in Perth on Jan 5th, might play out. It’s also critical that you understand the subtleties of your tariff and, where necessary, switch tariffs to ensure you’re on one that best suits the behaviour of your building.

This kind of basic data analysis should be within the grasp of most of us. Just ask your energy retailer or building manager for your historical interval data, get your tariff details from a recent bill, some local weather data from the BOM, and away you go.

By understanding your building’s historical behaviour and your tariff, you can start to anticipate the cost risk factors for your building.


If high demand is a big cost risk for your building, then you need an early warning system so you can take preventative action.

While many building managers only have access to historical interval data, and some poor sods only have access to monthly manual meter readings, an effective early warning system will need up to the minute electricity demand data.

Remember though, that networks in Australia typically calculate demand over a 30-minute period, so 5 minutes of very high use won’t necessarily hurt you, but keep it up for half an hour and it will.

But you don’t want to be staring a computer screen all day watching demand tick up on a hot day, so implement an early warning system that can send you an e-mail or SMS when you need to take action.

It’s also important to think about the timeframes required to take action. It might be too late to get a tap on the shoulder half-an-hour before your about to cross a critical threshold.


Depending on your building, you’ll have different options available to manage demand, and this is an area where you might need some advice from your engineering consultant. Options they might offer you could include pre-cooling the building in advance, or adjusting the chiller cycle or set-points on your HVAC system, or switching on a grid-synchronised generator.

The main point though is that demand costs are something you can pro-actively manage. The whole reason for these charges is to provide you a price signal, an incentive, to reduce your demand. Armed with the right data, the right tools and some forward planning you can make a big difference to your energy costs.

4 responses to “Electricity demand management, and what happens when you get it wrong”

  1. Burditt Krost says:

    Nice to read a succinct message which clearly sets out an understandable explanation of a complex subject.

  2. Harald says:

    Fully agree.
    Also important for anyone who is looking for assistance is to be aware of the fact, that some consultant have their issues with “reading power bills” and getting it right.
    Furthermore it might be of good value to engage someone who does understand building facilities (mainly HVAC) as well as often auditors / consultants are not capable of assisting in diving into building automation (BMS) and plant configurations and how to optimise them.
    The additional money spend on an integrated service provider with sound building services knowledge and experience is likely not to be much more while it will be a smother, faster and cheaper process in the end (long term) as less people are involved and double-up work can be avoided (each person to assess equipment, each writes a report, and so on).
    PS: to find out if a person / company understands the topic check their spelling – of technical units (kWh ✔️ Kwh ❌). Sounds trivial, happens a lot. Might be an indication of how serious such consultants take their job.

    Cheers Harald

  3. Wouldn’t it be great to have an intelligent air-condition, adjusting the internal temperature by the level of out-side temperature? one or two degrees more on a very hot summer day wont hurt that much, or would it?

    • Dan says:

      If you are talking about reducing the inside temperature then yes, it can make a difference to demand. If you are talking about increasing the temperature by a couple of degrees then it may help reduce demand. What would make more sense is an intelligent aircon that can tell how many Watts it is using and keep it under that maximum level, rather than reading temperature; or if they want to keep the building cool then you could use the plans from Greensense.

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