Peak shaving as production security: When the battery takes load off your electrical installation

Peak shaving is about cutting the short, high power peaks in a company's electricity consumption, without changing production itself. It is often introduced as an economic mechanism, a way to avoid expensive power tariffs. But the effect is not only financial: every time an installation draws markedly more power than usual, the main switchboard, cables, and transformer are physically loaded, independently of what eventually appears on the electricity bill. This article covers what peak shaving is, why power peaks arise, how a BESS (battery energy storage system) can reduce them, and how that fits into ZynexGroup's commercial model.

What peak shaving actually is

Grid infrastructure (transformers, cables, and switchboards) must be dimensioned for the highest load it needs to carry, not for the average. Both the grid company's network and the company's own installation are therefore, in practice, built for a power level that only occurs in short periods, while consumption remains far below that limit for most of the time, as a review of peak shaving in industrial BESS installations describes. Peak shaving is the practice of actively reducing exactly those short, high swings, so that the power level the installation and the grid actually have to handle moves closer to steady consumption, without changing the total amount of energy the company uses over a day. One hour of low consumption and one hour with a brief, very high draw give the same energy volume as two hours of even, moderate consumption, but the two scenarios load the installation and the grid very differently.

Why power peaks arise

Power peaks typically arise when several large consumers draw power at the same time, or when individual consumers briefly draw far more than they do in normal operation.

Motor starts are one of the most common sources. If a large motor, for example in a compressor, a pump, or a fan, starts directly, the starting current can be markedly higher than the motor's normal rated current, up to roughly six to ten times at a direct-on-line start, before it falls to normal operating current after a few seconds. Star-delta starting or a soft starter can reduce the peak considerably, but is not automatically present on all existing equipment. Cooling plants and oven processes contribute in a different way: they cycle between operation and pause to hold a temperature and therefore start repeatedly over a day. If several compressors or ovens hit their start point at the same time, for example because they are controlled by the same temperature logic or the same shift, several short peaks stack into one large one.

EV chargers and equipment charging are a newer, growing source. A single charger draws a fixed, known power, but the problem arises when several users charge in the same short window, typically around shift start or shift end. A study of public charging stations shows that the simultaneity factor, that is how large a share of the connected power is actually drawn at the same time, rises markedly when several charge points are used in the same period, and that charging strategies that optimise for the cheapest electricity price can in fact create even higher peaks than a simple "charge immediately" approach, because all users shift consumption into the same cheap hour. The shared pattern recurs: when several large consumers, independently of each other, hit their high load point within the same short time window, their individual peaks stack into a far larger combined peak.

How a BESS can reduce power peaks

The mechanism is relatively simple, even though the control behind it is not. The system charges when the installation's total consumption is low, and discharges in the short periods where consumption would otherwise exceed a defined power ceiling for how much is drawn from the grid. The discharge covers part of the peak the installation would otherwise draw, so the measured consumption from the grid becomes lower and more even, as described in a review of peak shaving with BESS. That requires the system to know when the peak is coming, or to react quickly enough to discharge before it is over.

How much a given peak can be cut depends on the system's power in kW, that is how much it can discharge at once, and on how long the peak lasts and how much energy in kWh is needed to cover it. A brief, sharp peak requires relatively little energy, while a prolonged peak requires more capacity. It is therefore not a given that any system can cut any peak; it depends on the specific consumption pattern.

Why it often reaches beyond the electricity bill

Two Danish conditions mean that the effect of peak shaving does not stop at the electricity bill. Part of the grid tariff for larger customers connected at higher voltage is today based on power rather than only consumption. Under the industry-approved Tarifmodel 3.0 (Tariff Model 3.0), which Forsyningstilsynet (the Danish Utility Regulator) has taken note of, the customer categories B-høj, A-lav, and A-høj pay a separate power charge on top of the ordinary kWh tariff, because a large share of the grid at their voltage level is in practice built for their specific power need. The share varies from grid company to grid company and by customer type, and does not apply to all Danish electricity customers, as this article series has previously shown with Cerius and Radius's own models for large customers. For the customer groups it does apply to, a lower power peak does reduce the ongoing payment for grid access.

At the same time, the physical load on the switchboard, cables, and transformer is real, regardless of what the tariff says: repeated, high power peaks push components closer to their limit, which can make an existing grid connection less usable in practice than on paper. A more even profile means the same nominal connection can be used better, which carries particular weight now because additional grid capacity in Denmark is hard to obtain quickly: Energinet, Denmark's national transmission system operator, has introduced a temporary pause and a new, pooled review model for larger grid connections, because remaining capacity in the transmission network is very limited, and for the largest connections the timeline for an upgrade can stretch over several years. Whether a battery can defer an actual grid upgrade, however, depends on the consumption pattern, not on a general rule. Deferral works best for load profiles with a clear difference between peak demand and lower consumption outside peak periods, while flat consumption profiles offer far less potential.

Peak shaving, ZynexGroup's optimisation, and reserved capacity: three things that are easily confused

In our standard model, we optimise the system's flexibility commercially in the market, and the customer receives a fixed contractual availability payment in return. That optimisation is not tied to a single market: Danish battery systems typically create value by combining several revenue streams (the spot market, the intraday market, system services, and, where it makes sense, peak shaving), because several markets together give a more stable business than dependence on a single market. Peak shaving can therefore often form a natural part of the same optimisation that otherwise controls the system, instead of being a separate product the customer has to buy on top; the same control that already charges and discharges the system to use price swings and market needs can also account for avoiding unnecessarily high power peaks at the customer, without extra reserved capacity and without changing the underlying availability payment. That does, however, assume that it actually supports the overall optimisation for that specific installation; it is not an automatic function regardless of consumption pattern.

Three concepts use the same underlying mechanic, the battery's ability to discharge in short periods, but have different purposes. Peak shaving for the customer's own bill and installation load, as described above, reduces the power peaks that directly affect the customer's electricity bill and the installation's load, independently of how the system is otherwise used commercially. Peak shaving as part of ZynexGroup's optimisation strategy is when the same ability to discharge quickly forms part of the broader commercial control of the system, where the decision on when to charge and discharge also accounts for prices and market needs, not only the customer's own power peak; the two often pull in the same direction, but are two angles on the same capacity. Reserved capacity for the customer's specific operational needs is something else again: a share of capacity that, after a specific analysis, is earmarked to supply selected critical loads during a grid outage, not to cut power peaks under normal operation. The more capacity that is reserved for that purpose, the less remains available for both peak shaving and the remaining optimisation, and the calculation basis can be adjusted proportionally in the specific agreement, without any fixed percentage.

What is required to assess the potential

It is not possible to know whether peak shaving delivers value for a given installation without knowing its consumption pattern in detail. Annual totals are not enough: Energistyrelsen's (the Danish Energy Agency's) guidance on matching electricity-producing installations to a company's own process consumption requires hour-resolution profiles. Main meter data shows total consumption over time, typically at hourly resolution or finer, and is already the basis for power charges for the customer groups it applies to, because the grid companies themselves calculate the charge from the customer's own metering data. The production profile shows how production actually runs over the day and year, and when the large consumers are typically in operation. Switchboard data describes where the large, potentially peaking consumers sit in the switchboard structure, which matters for where a battery system is best placed. The power profile, the actual course of drawn kW over the day, ties it together and shows where the peaks sit, how often they occur, and how large they are. Finally, a prioritisation of loads is relevant even when the purpose is peak shaving and not backup: knowing which consumers drive the peaks gives a more precise picture of how large a contribution the system can realistically make.

ZynexGroup's approach to system assessment

We do not assess whether peak shaving delivers value for an installation before we have seen data. It starts with main meter data and the power profile over the day and year, supplemented with knowledge of the production pattern, the switchboard structure, and which loads typically drive the highest draws. On that basis we can have a data-driven discussion about how large a share of the potential can already form a natural part of the standard model's commercial optimisation, and when it instead points toward reserved capacity or other add-ons. If the conclusion is that the consumption pattern is too flat for peak shaving to make a real contribution, we say so.

Overall perspective

Peak shaving cuts short, high power peaks without changing the production behind them. The peaks typically arise when large consumers such as motors, compressors, cooling plants, oven processes, or chargers draw power simultaneously or briefly far above their normal level. An industrial BESS can cover part of the peak by discharging in exactly those moments, which can reduce power-based tariffs for the customer groups it applies to, take load off the installation physically, and improve utilisation of an existing grid connection, at a time when new grid capacity in Denmark is hard to obtain quickly. In ZynexGroup's model it can often form a natural part of the commercial optimisation that otherwise controls the system, instead of being a separate product, but the value depends entirely on the consumption pattern: peak shaving helps most where there are sharp, clear peaks to cut.

Assessing the potential for your facility

If you want to know whether peak shaving can contribute to your installation, the starting point is your own data: main meter data, the power profile over the day and year, and knowledge of which loads typically drive your highest draws. We use that kind of data for an initial assessment of whether there is a match between your consumption pattern and an industrial BESS, and what the next step could then be. You are welcome to contact us here.