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How utilities understand the loads…

As part of their drive towards synchronizing the consumption and production of electrical energy over the long term, energy distribution companies tailor their rates to encourage consumers to reduce their requirements during peak periods.

Smart Load Management Strategies To Save Energy
Smart Load Management Strategies To Save Energy

A number of different strategies are possible, depending on consumption levels and operating requirements: restricting demand (see Figure above), avoiding peak periods, load scheduling or even generating additional energy on site.

Let’s see the each of stated strategies:

1. Demand restriction

Energy distribution companies can use this solution in supply contracts containing optional or emergency (involving compulsory limits) restrictive clauses whose application is determined by the consumer (based on special rates).

This management policy is typically used during the hottest or coldest months of the year when companies and private customers have very high requirements for ventilation, air conditioning and heating, and when electricity consumption exceeds normal demand considerably.

Reducing consumption in this way can prove problematic in residential and service sector environments, as they may considerably inconvenience building occupants. Customers from industry may show more of an interest in this type of scheme and could benefit from contracts reducing unit costs by up to 30% if they have a high number of non-essential loads.

SCADA video wall seen in some National Power Utility company
SCADA video wall seen in some National Power Utility company

2. Peak demand avoidance

This method involves moving consumption peaks in line with the different rates available. The idea is to reduce bills, even if overall consumption remains the same.

3. Load scheduling

This management strategy is an option for companies able to benefit from lower rates by scheduling consumption for all their processes where time of day is neither important nor critical.

4. Additional energy generation on site

The use of generating sets to supply energy improves operational flexibility by providing the energy needed to continue normal operations during periods of peak or restricted demand. An automated control system can be configured to manage this energy production in line with needs and the rates applicable at any given time.

When energy supplied from outside becomes more expensive than energy generated internally, the control system automatically switches between the two.

How customers understand the loads…

A company’s (or anyone’s) electric bill, in most countries, consists of two major components:

  1. Demand charge and
  2. Energy consumption charge.

Demand charges are reset monthly and are based on the highest rate at which electricity is consumed during periods that are peak utility service hours. Demand charges are measured in kilowatts and, depending on the utility service provider, the highest consumption rate is measured in 15- or 30-minute intervals during peak hours or contracted value.

Demand charges form a significant portion of a company’s monthly electric bill.

Peak load management strategies that lower a facility’s demand during times when the peak demand is measured can result in significant facility cost savings, especially for commercial, industrial and governmental sectors.

Smart load management – Smart customer

Smart electrical load management solutions are designed to gain advanced control and minimize cost. They include applications to help reduce downtime, reduce energy costs, support capacity planning, improve efficiency and provide a view into the system as a whole.

Electrical load management solutions generally help to:

  • Avoid excess demand charges by reducing peak demand
  • Lessen the impact of utility power outages
  • Reduce power factor penalties from the utility company
  • Reduce the negative effects of poor power factor or high harmonic content
  • Automatically control on-site generation and secondary systems
  • Control an industrial electrical distribution system with minimal staff


  • Electrical Installation Guide 2015 // Schneider Electric (Download Guide)
  • Load Management System Using Intelligent Monitoring and Control System for Commercial and Industrial Sectors – M.M. Eissa, S.M. Wasfy and M.M. Sallam
  • Power and Energy Management Solutions – Rockwell Automation, Inc.

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Edvard Csanyi

Electrical engineer, programmer and founder of EEP. Highly specialized for design of LV/MV switchgears and LV high power busbar trunking (<6300A) in power substations, commercial buildings and industry facilities. Professional in AutoCAD programming.


    Sep 17, 2015

    hello Edvard.

    How to become like you? so knowledgeable!! Teach me please.

  2. Abhishek priyadarshi
    Feb 18, 2015

    A very good article on energy management’s very informative…

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