Electricity Demand Charges and EV Charge Stations
As the adoption of electric vehicles (EVs) continues to grow, the need for charging infrastructure is more critical than ever. For businesses and municipalities installing EV charge stations, particularly Level 3 fast chargers, understanding electricity demand charges is essential to managing operating costs.
What Are Demand Charges?
Electricity demand charges are fees that utilities impose based on the highest level of electricity a business draws from the grid during a billing cycle. Unlike regular usage charges, which are based on the total amount of electricity consumed (measured in kilowatt-hour [kWh]), demand charges (measured in kiloVolt Amperes [kVA] or in kiloWatts [kW])reflect the peak power usage at any point during a certain period that can vary anywhere from a month to a year. These charges can significantly impact the financials of operating a charge station, especially for high-power devices like Level 3 fast chargers.
Level 3 fast chargers can draw substantial power, anywhere between 30 kW to 360 kW or more, leading to high demand charges. These charges can make up a large portion of the monthly electricity bill, often exceeding the cost of the electricity itself.
Demand Charges Across Canada and the US
Demand charges vary significantly across Canadian provinces and American States and even depend on the utility companies that provide the power in a certain jurisdictions, making it essential for businesses to understand their local electricity rates. On an average demand charges vary between $10 to $30 per kW, and trigger when the peak power draw is above anywhere between 35kW and 50kW. Understanding these variations can help in planning and budgeting for charge station operations.
For example, if your utility company charges $20/kW demand charges for peak power above 50kW, and you install a 300kW charge station, your monthly demand charge fee will be approximately (300kW-50kW)*$20/kW = $5000 per month.
Strategies to Work Around Demand Charges
Managing demand charges effectively can lead to significant savings and thereby maximizing operating profits. Here are some strategies to consider:
Install Lower Power Charge Stations: One of the simplest ways to reduce demand charges is to opt for lower power charge stations. While this might slightly increase the charging time for EVs, it can significantly lower peak power demand and potentially avoid demand charges altogether, making the charge station much more profitable as an operator.
Separate Utility Service: Installing a separate utility service for the charge stations can reduce or eliminate demand charges since the chargers will be the only device drawing power on the service, opposed to sharing the service and available power with a building or other devices. This prevents the demand from a high-powered charger from inflating the demand charges for the rest of your facility.
Utilize Excess Power Capacity: If your existing business has excess power capacity, you can utilize this to power your charge stations. By carefully managing the total power draw, you can avoid triggering additional demand charges and you won’t need to purchase a new power service from your utility company.
Install a Local Power Monitor: A local power monitor can be installed at your facility to track real-time power consumption. This data can be used to limit the maximum allowed power draw of all charge stations, ensuring that the combined power usage of your business and the charge stations doesn’t exceed a certain threshold. This combined with the software managing the charge stations can maximize your available power without extra demand charges and without needing a new utility service. This is usually the best option if your facility can accommodate.
Case Example 1: Using a Lower Power Fast Charger
Facility Overview
Total Power Capacity: 100 kW
Average Usage: 10-15 kW
Peak Usage: 20 kW
Demand Charge Threshold: 50 kW (Demand charges apply if usage exceeds this limit)
Installed EV Charging Station: 30 kW Level 2 charger
Scenario
The facility typically operates with an average power usage of 10-15 kW and occasionally peaks at 20 kW. With the installation of a 30 kW EV charging station, the facility aims to stay within its existing power plan and avoid triggering demand charges.
Since the facility's peak usage is 20 kW, adding the 30 kW charger would bring the total power usage to 50 kW, which matches the demand charge threshold but does not exceed it. The facility can therefore integrate the charger into its existing power plan without any additional equipment like a power monitor.
Operation
Normal Operation (10-15 kW Facility Usage):
Facility Usage: 10-15 kW
Total with Charger: 40-45 kW
Demand Charge Risk: The combined load is well below the 50 kW threshold, so there is no risk of triggering major demand charges.
Peak Usage (20 kW Facility Usage):
Facility Usage: 20 kW
Total with Charger: 50 kW
Demand Charge Risk: The combined load exactly meets the 50 kW threshold. The facility is utilizing its full capacity but still avoids exceeding the threshold, so no demand charges are triggered.
Occasional High-Demand Scenario:
If the facility occasionally needs to operate equipment that temporarily pushes usage above 20 kW (e.g., starting up a large HVAC system or industrial machinery), this usually doesn’t impact demand charges. The “peak” as determined by the utility company is the average peak over a time period, usually between 15-60 minutes. A temporary spike in power is “averaged out”, and will not create a demand charge trigger.
Benefits
Cost Efficiency: By integrating the 30 kW charger into the existing power plan without exceeding the demand charge threshold, the facility can offer EV charging services without incurring additional operational costs.
Simplicity: There’s no need for additional power monitoring or dynamic load management systems, simplifying the installation and ongoing operations.
Full Utilization of Available Power: The facility maximizes its available power capacity by using it for both its regular operations and EV charging without exceeding limits.
This case demonstrates how a facility with a peak usage of 20 kW can seamlessly integrate a 30 kW EV charging station without exceeding its 50 kW demand charge threshold. By fitting the charger into the existing power plan, the facility avoids the need for additional monitoring systems while still providing EV charging services, ensuring cost-effective and efficient use of its electrical capacity.
Case Example 2: Maximizing Available Power with a Real-Time Power Monitor
Building Overview
Total Power Capacity: 500 kW
Average Usage: 300 kW (200 kW spare capacity)
Peak Usage: 450 kW (50 kW spare capacity)
Installed EV Charging Station: 180 kW Level 3 DC fast charger
Scenario
The building typically operates with 200 kW of spare power, which allows it to comfortably accommodate the 180 kW EV charging station (or two 90 kW charge stations). However, during certain times, the building's power demand peaks, leaving only 50 kW of spare capacity.
Challenges
Power Overload Risk: If the EV charger operates at full capacity during peak building usage, the combined load would exceed the building's total power capacity (450 kW peak usage + 180 kW charger = 630 kW), potentially triggering overloads, demand charges, or causing power outages.
Solution: Local Energy Monitor with Dynamic Load Management
A local energy monitor is installed to measure the real-time power consumption of the building's main 3-phase electrical panel. This monitor is integrated with the EV charging station and connected to the software backend via an internet connection. The system dynamically adjusts the power output of the EV charger based on the building's real-time power usage.
Operation
Normal Operation (200 kW Spare Capacity):
Building Usage: 300 kW
Spare Capacity: 200 kW
EV Charger Operation: The energy monitor detects sufficient spare capacity and allows the EV charger to operate at full 180 kW.
Peak Demand (50 kW Spare Capacity):
Building Usage: 450 kW
Spare Capacity: 50 kW
EV Charger Operation: The energy monitor detects that only 50 kW of spare capacity is available. To prevent overloading the system, the EV charger automatically reduces its power output to 50 kW.
Critical Peak (Less than 50 kW Spare Capacity):
Building Usage: 480 kW
Spare Capacity: 20 kW
EV Charger Operation: The charger reduces its power output to 20 kW or temporarily suspends charging to avoid exceeding the building's power capacity.
Benefits
Prevention of Overload: Dynamic load management prevents the building's power system from being overloaded, protecting both the building's infrastructure and the EV charging station.
Demand Charge Mitigation: By reducing the charger’s power output during peak times, the system helps minimize demand charges.
Optimized Charging: The EV charger can still provide charging at full power most of the time without compromising the building's power needs.
This case demonstrates how a local energy monitor integrated with an EV charging station can dynamically manage power usage to prevent overloads and reduce costs in a building with fluctuating power demands.
Conclusion
Electricity demand charges are an important factor to consider when operating EV charge stations, especially Level 3 fast chargers. By understanding how these charges work and implementing strategies to manage peak power demand, businesses can significantly reduce their EV charger installation costs and operating costs while utilize the maximum power capacity they have. At Teal, we’re committed to helping our customers navigate these challenges with innovative solutions that maximize efficiency and minimize costs.
