In short. Peak shaving limits the maximum power drawn from the utility by supplying the top slice of demand from a battery, a generator or controlled load reduction. The rating is set by the height of the peak above the target, and the energy by how long it lasts. Whether it pays depends on the tariff’s demand charges and the load profile, so peak shaving is a load data and tariff problem before it is a battery size problem.
The idea in one diagram’s worth of words
Suppose a factory’s demand rises to 1,200 kW for part of the afternoon and the aim is to keep the import from the DISCOM at 900 kW. During that period roughly 300 kW must come from somewhere else: a battery discharging, a generator running in parallel, or loads deliberately switched off. The rest of the day the site imports normally and the battery recharges or the generator stands idle. The target is usually set by a contract demand or by the billing demand that triggers penalties, and the saving is the difference between the demand charge at 1,200 kW and at 900 kW, less the cost of supplying the slice.
Power is easy, energy is the question
Three hundred kilowatts for fifteen minutes is 75 kWh. Three hundred kilowatts for four hours is 1,200 kWh. The battery for the second case is sixteen times larger than for the first, for the same kW. Demand data without time resolution cannot distinguish the two, which is why half-hourly or fifteen-minute interval data from the meter or an energy logger is the first thing we ask for. The analysis must also show how many peak events occur per day and how much time there is between them to recharge.
Battery energy (kWh) = Σ over the peak period of (Demand − Target) × Δt ÷ (DoD × η)
Here Demand and Target are in kW, Δt is the interval length in hours, DoD is the usable depth of discharge and η the round-trip efficiency. Worked example (illustrative): a peak that exceeds the 900 kW target by an average of 220 kW for 2.5 hours needs 550 kWh of delivered energy; with 0.85 DoD and 0.9 efficiency that is about 720 kWh nameplate, and the PCS must be rated for the highest instantaneous excess, say 320 kW, not the average. The BESS power requirement calculator and its energy companion run this arithmetic from your data.
Battery, generator or load control
| Method | Suits | Cost drivers | Limits |
|---|---|---|---|
| Battery (BESS) | Short, frequent, predictable peaks of minutes to a few hours | Capital, degradation, auxiliary losses | Energy runs out on long peaks; capacity fades with cycling |
| Generator in parallel | Long peaks of several hours, sites with an existing set and synchronising gear | Diesel, maintenance, run hours, emissions | Requires utility paralleling approval; CPCB operating restrictions in some regions |
| Load control | Sites with deferrable loads such as chillers, compressors, pumps | Controls, minor production impact | Limited by how much load can genuinely be deferred |
| Combination | Most industrial sites | Controller complexity | Needs a clear priority order |
Running a diesel set in parallel with the grid purely to shave peaks is possible, but the fuel cost per kWh is usually higher than the grid tariff, so the saving must come entirely from the demand charge and penalty avoided. The engineering note on peak shaving covers the generator calculation, and the utility paralleling guide covers the switchgear and protection the DISCOM will require.
Do not double-book the energy
A battery bought for peak shaving is also, in the owner’s mind, a backup source. The two duties collide at the worst moment: the afternoon peak drains the battery, and the evening grid failure finds it empty. If backup is a committed function, the EMS must reserve the backup energy and shave peaks only with what remains. That is a control allocation rather than a physical partition, but it must be defined, tested and reported. The same logic applies to black-start reserve and to any contracted grid service. One megawatt-hour cannot be promised to three obligations at once, and the kWh you must buy is the sum of them.
Interaction with generators and UPS on the same site
Peak shaving changes what the standby generator sees. If the battery normally carries the top 300 kW and the grid fails, the generator must carry the full 1,200 kW unless the battery still has energy to help. Conversely, when the generator picks up a site after an outage, UPS units start recharging their own batteries and chillers restart, creating a generator demand peak that a BESS can also soften if it has been left with reserve. These interactions are why peak-shaving systems on generator-backed sites are designed as part of the whole integrated power system rather than bolted on at the meter.
Checking whether it pays
Take twelve months of interval data and the actual tariff schedule, including contract demand, billing demand rules, time-of-day rates and penalty structure. Model the battery or generator against every peak event, allowing for recharge time, efficiency, degradation over the project life and the reserve you hold back. Count the number of days per year on which the peak would still be exceeded and the penalty still paid. If the saving depends on a single annual peak, the system is probably oversized; if peaks are daily and short, the case is often strong. Tariffs change, so the model should survive a reasonable change in the demand charge.
Common mistakes
- Sizing from the monthly maximum demand figure alone without interval data. The battery is either too small to reach the target or far larger than needed.
- Using the peak-shaving battery as the emergency backup without a reserve. The outage arrives with the battery discharged.
- Ignoring recharge time between consecutive peaks. The second peak of the day is not shaved and the penalty is paid anyway.
- Modelling day-one battery capacity for a ten-year business case. By year five the battery no longer reaches the target.
- Running a generator in parallel with the grid without DISCOM approval and proper protection. The connection is disconnected and penalties follow.
What to send us
Send twelve months of fifteen-minute or half-hourly interval data from the DISCOM meter or your energy management system, the tariff schedule and recent electricity bills showing contract and billing demand, and a list of large loads with any that can be deferred. Add the generator nameplate if a set exists and photographs of the metering panel and main switchboard. Through the application engineering enquiry we will return the kW and kWh needed to reach a chosen target and an estimate of the annual demand saving.
Questions engineers ask
How much battery do I need to shave 200 kW off my peak?
The PCS must be rated for at least 200 kW plus margin, and the energy depends on how long the peak lasts and how many occur between recharges. A one-hour peak needs roughly 250 to 300 kWh nameplate; a four-hour peak needs four times that.
Can I use my existing diesel generator for peak shaving?
Only in parallel with the grid, which requires synchronising switchgear, protection and the DISCOM’s approval, and only where regulations permit DG operation for that purpose. The fuel cost per kWh is usually above the tariff, so the saving must come from the demand charge alone.
Will peak shaving reduce my connected load or transformer size?
No. The site’s equipment and the transformer still see the full load; only the import from the grid is reduced. Transformer loading can even rise when the battery recharges on top of normal demand, so check the thermal duty.
Does the battery still provide backup during an outage?
Only to the extent that energy has been reserved for it. If the EMS holds a defined reserve the battery can bridge the outage or support the generator start; if it does not, the battery may be empty at exactly the wrong time.
What data resolution do I need?
Fifteen-minute or half-hourly interval data for at least a full year, so that seasonal peaks and the duration of each event are visible. Monthly maximum demand figures alone cannot size the energy.
Technical content reviewed by Srinivas Reddy, Managing Partner, Reddy Generators. Last updated 19 October 2026.