824 Demand Charges

The cost of producing electricity has two major components: fuel and capital (for power plant and distribution system). As a consequence, the cost of electricity varies with the total load on the grid. To the extent that it is practical, deregulated electric utilities will try to base the rate schedule on their production cost. Even without full deregulation, rates for large customers contain two items: one part of the bill is proportional to the energy and another part is proportional to the peak demand.* If the monthly demand charge is piem and the energy charge is pe, a customer with monthly energy consumption Qm and peak demand Pmax will receive a total bill of mOnthly bil1 = Qm Pe + Pmax Pdem (8.33)

There are many small variations from one utility company to another. In most cases Pe and pdem depend on time of day and time of year, being higher during the system peak than off-peak. In regions with extensive air conditioning, the system peak occurs in the afternoon of the hottest days. In regions with much electric heating, the peak is correlated with outdoor temperature. Some companies use what is called a ratcheted demand charge; it has the effect of basing the demand charge on the annual, rather than monthly, peak.

* Of course, utility bills can contain up to several dozen different charges, but two of the largest are for energy and demand if real-time pricing is not used. For true RTP rates, the energy and demand charges are combined into one energy-based charge.

With the advent of deregulated utilities, the pricing of electricity will be simpler. Bids at a power exchange will include both energy and demand charges. A separate auction will be used for ancillary services such as voltage support, VAR support, black start, and spinning reserve. The operation of these markets is the subject of the last section of this chapter dealing with financial dimensions of DG power.

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

Get My Free Ebook

Post a comment