Energy efficiency projects are more than just a way to reduce your carbon footprint; they can also significantly lower your electricity costs. Many businesses embark on these projects with the primary goal of reducing energy consumption, but there’s an additional benefit that’s often overlooked—qualifying for a lower electricity rate. After completing an energy efficiency project, you may be eligible for reduced rates on your electricity bill, especially if your project effectively lowers your overall energy demand. In this blog, we’ll explore how electric transmission and capacity costs are set based on demand, how lowering that demand can help you pay less for these costs, the various ways you can reduce your energy demand, and how Access Energy Services can assist you in maximizing these benefits.
How Electric Demand Affects Supply Rates
Electricity rates are influenced by several factors, including transmission and capacity costs. These costs are primarily determined by your peak energy demand, which refers to the highest amount of electricity your business uses during a specific period, typically during peak hours or seasons.
- Transmission Costs: Transmission costs are fees associated with delivering electricity from power plants to your facility. These costs are influenced by the infrastructure required to transmit power and the demand on the transmission system. The higher your demand, especially during peak periods, the higher your transmission costs will be.
- Capacity Costs: Capacity costs, on the other hand, are fees charged to ensure that enough power generation capacity is available to meet peak demand. These charges are set through capacity auctions, where power generators bid to provide capacity for future periods. Your business’s peak demand during the highest usage hours—often referred to as the “capacity tag”—directly impacts the capacity charges you pay. Essentially, the higher your demand during these peak hours, the higher your capacity costs.
Why Lower Demand Means Lower Electrc Rates
One of the most effective ways to lower your electricity costs is by reducing your peak demand. When you lower your energy usage during peak times, you decrease your capacity tag, which in turn lowers the capacity charges you’re responsible for. Additionally, reducing your overall energy demand can lead to lower transmission costs, as the strain on the transmission system is reduced.
Here’s how this works:
- Reduced Capacity Tag: After an energy efficiency project, if your business reduces its energy consumption, particularly during peak hours, your new lower demand will be reflected in your capacity tag. A lower capacity tag means lower capacity charges, which can lead to significant savings on your electricity bill.
- Lower Transmission Fees: By lowering your overall demand, particularly during periods of high usage, you can reduce the load on the transmission system. This reduction can translate into lower transmission fees, as you’re contributing less to the peak strain on the grid.
- Qualification for Better Rates: Energy suppliers often offer better rates to businesses with lower and more consistent energy demand. After completing an energy efficiency project, your business may become eligible for these lower rates, further reducing your electricity costs.
Ways To Lower Demand
There are several strategies your business can implement to lower energy demand, particularly during peak hours:
- Energy Efficiency Upgrades: Invest in energy-efficient lighting, HVAC systems, and equipment. These upgrades can significantly reduce your overall energy consumption and peak demand.
- Demand Response Programs: Participate in demand response programs, where you agree to reduce your energy usage during peak periods in exchange for financial incentives. This not only lowers your capacity tag but also earns you credits on your electricity bill.
- Load Shifting: Adjust your operations to shift energy-intensive processes to off-peak hours. For example, running heavy machinery or equipment during the night instead of during peak daytime hours can reduce your peak demand.
- On-Site Generation: Consider installing on-site generation systems, such as solar panels or backup generators. These systems can supply your energy needs during peak periods, reducing your reliance on the grid and lowering your capacity charges.
- Smart Energy Management Systems: Implement smart energy management systems that monitor and optimize your energy usage in real-time. These systems can automatically adjust your energy consumption to minimize demand during peak periods.
How Access Energy Can Help
At Access Energy Services, we specialize in helping businesses navigate the complexities of energy costs and identifying opportunities for savings. Our team of experts can assist you in understanding your current energy demand profile and how it impacts your electricity rates. We’ll work with you to develop a tailored energy efficiency strategy that not only reduces your energy consumption but also positions you to qualify for lower electricity rates.
We offer a comprehensive range of services, including:
- Energy Audits: We’ll conduct a thorough analysis of your energy usage to identify areas for improvement and potential cost savings.
- Rate Analysis: Our team will review your current energy rates and help you negotiate better terms with your energy supplier.
- Demand Management Solutions: We’ll recommend and implement strategies to lower your peak demand, reducing your capacity and transmission costs.
- Ongoing Support: After your energy efficiency project is complete, we’ll continue to monitor your energy usage and provide guidance on maintaining lower demand and qualifying for the best rates.
Reducing your electricity rates is more achievable than you might think, especially after completing an energy efficiency project. With the right approach, you can lower your energy demand, reduce transmission and capacity costs, and ultimately pay less for your electricity. Contact Access Energy today to learn how we can help you achieve these savings and secure a more cost-effective energy future for your business.
Ready to start saving on your electricity rates? Contact Access Energy today for a free consultation and let us help you unlock the benefits of your energy efficiency project.
