Introduction
A decade ago, I walked into a refrigerated warehouse outside Chicago where the monthly electric bill was more than the lease. Not because they used too much energy overall, but because they were hit with brutal demand charges—$0.40 per kilowatt at their highest spike, no matter how brief. Nights? Their rate dropped to a third of that, but they had no way to use it.
This is the story for countless commercial sites: you pay not just for how much electricity you use, but when you use it. That means the real trick isn’t reducing total energy consumption—it’s timing your use smarter.
That’s where peak shaving and valley filling come in. With a little battery tech, smart control, and strategy, you can save tens (sometimes hundreds) of thousands per year. It’s not magic. It’s math. Let’s break it down.
Kamada Power 100 kWh Battery
What Is Peak Shaving?
Definition: Cutting Peak Demand Like Trimming Spikes in Power Use
Think of peak shaving like leaving for work 30 minutes early to avoid rush hour traffic. Same road, same car—just smarter timing.
“Peak demand” refers to the highest amount of power your facility draws at any one time. That short spike? Utilities charge you dearly for it. Peak shaving means trimming those spikes using tools like battery energy storage.
How Demand Charges Hurt Industrial and Commercial Facilities
Let’s say you have a plant running mostly at 200 kW, but twice a month you ramp up to 600 kW for an hour. Under demand-based billing (TOU or demand tariffs), that hour could cost you $0.30 to $0.50 per kilowatt. Now multiply that by 400 kW and 12 months…
Suddenly, you’re paying $24,000 annually for maybe 24 hours of high usage. That’s the tyranny of the spike.
I once worked with a packaging facility where forklifts charging at shift changes caused sudden 10-minute demand spikes. By installing a 100 kWh battery system controlled by a basic EMS, they flattened the curve and saved $19,800 in the first year.
Technologies Used for Peak Shaving
- Battery Energy Storage Systems (BESS): LFP chemistries are favored for longevity and safety
- Smart Controllers & EMS: Think of them as the ‘brain’ that knows when to act
- Demand Response Programs: Grid pays you to lower your demand at key times
But here’s the thing nobody tells you: Poorly configured systems can backfire. If your EMS doesn’t align with utility tariff windows or is too slow to react, you might end up chasing spikes instead of shaving them.
What Is Valley Filling?
Definition: Shifting Loads to Low-Cost, Off-Peak Hours
Valley filling is the quieter sibling of peak shaving. It means using cheap, off-peak electricity when demand is low (typically at night), and storing it or shifting operations to those periods. You’re “filling the valleys” of the grid load curve.
It’s also a form of grid altruism. You’re balancing out the load, preventing generation ramp-ups, and stabilizing the network.
Example: Charging Batteries Overnight, Discharging During Daytime Peaks
One of my clients in Phoenix, running an office park with EV chargers and HVAC-heavy use, began charging a BESS overnight when prices were lowest. During the brutal 4-6 p.m. window in July, the same battery discharged to reduce building load. Their load curve smoothed out like melted butter. The ROI? About 2.7 years.
Valley filling also plays well with solar overproduction. That 12 p.m. surplus? Store it. Use it at 6 p.m. when the sun’s gone but the demand isn’t.
How Valley Filling Complements Peak Shaving
If peak shaving is defense, valley filling is offense. One prevents cost spikes; the other optimizes savings. Together, they form a synergistic strategy:
| Strategy | Goal | Action |
|---|
| Peak Shaving | Avoid high demand charges | Discharge battery during peak loads |
| Valley Filling | Maximize off-peak usage | Charge battery during cheap hours |
This combo is the heart of energy arbitrage. Buy low, sell (or save) high.
Why Peak Shaving and Valley Filling Matter for Your Business
Electricity Bill Breakdown: Why Demand Charges Matter
In commercial and industrial (C&I) facilities, demand charges can make up 40–60% of your monthly bill. For a facility paying $10,000/month, $4,000 of that could stem from just a few 15-minute intervals.
Install a 100kWh battery system with a C-rate of 1C? You could reduce peak demand by 100kW for one hour. That alone might save $20,000 per year, depending on rates.
Business Benefits
- Lower Bills: Obvious, but often underestimated
- Increased Reliability: Batteries provide brief backup during outages
- Grid Services Revenue: Enroll in DR programs or capacity markets
In PJM territory, one client earned $9,200/year just for being on standby to reduce load when asked.
Incentives and Programs That Support It
From CAISO in California to NYISO in New York, grid operators are begging for distributed energy resources (DERs). You might be eligible for:
- Utility rebates for BESS installations
- Participation payments for non-wires alternatives
- Tax incentives (e.g., ITC for storage paired with solar)
Frankly, these incentives won’t last forever. Once storage is ubiquitous, utilities won’t need to bribe you to install it.
How to Implement Peak Shaving and Valley Filling
Step-by-Step Plan for Facility Energy Managers
- Load Profiling: Collect 15-min interval data for at least 6 months
- System Sizing: Don’t just guess. Use software modeling tools
- Control Strategy: Manual overrides, semi-automated dispatch, or fully AI-driven
- EMS Integration: Sync with SCADA or BMS; ensure real-time data flow
I once saw a bakery blow $80k on an oversized battery that never dispatched. Why? They skipped the load profile. Don’t be that bakery.
Choosing the Right Battery System for the Job
- Chemistry: LFP (Lithium Iron Phosphate) is safer and lasts longer
- Specs to Watch:
- Cycle Life (6000+ preferred)
- Depth of Discharge (DoD > 90%)
- C-rate (1C+ for peak shaving)
- Safety/Environmental: Fire suppression, thermal stability, IP ratings matter
Energy Management Software & Predictive Control
Modern EMS systems use AI to forecast your load and electricity prices. That means:
- Predictive analytics = anticipating spikes before they happen
- Real-time control = reacting instantly to grid signals
- Machine learning = adapting to seasonal or operational shifts
Frankly, I was skeptical of AI-based EMS at first. Too many false positives. But newer systems with hybrid rule-ML models are getting scary good. My gut tells me this is where the real transformation will come.
Common Mistakes and Misconceptions
“Only Big Companies Benefit”
That’s just wrong. I’ve helped 2000 sq ft warehouses save thousands annually. It’s about demand intensity, not square footage.
“Just Add Batteries”
Without good control logic and tariff understanding, your battery is a paperweight. You need:
- Tariff mapping
- Seasonal usage planning
- Load spike prediction
Poor Load Forecasting = Poor Results
I saw a logistics center undersize their battery because they modeled January load… and forgot about July. The system capped out, couldn’t shave peak, and they missed their ROI.
Rule of thumb? Model your worst month, not your average.
The Future of Load Management
AI and Grid-Interactive Optimization
Autonomous EMS will become the norm. Systems that:
- Self-learn patterns
- Self-optimize dispatch windows
- Trade power across microgrids
Virtual Power Plants (VPPs) and Aggregation
Picture this: 500 small batteries across businesses acting as one big flexible resource. Grid pays you to play.
This already works in Australia. It’s coming to the U.S.
Load Shaping as a Service (LSaaS)
Think managed IT services—but for energy. Companies provide full-stack systems + software + monitoring for a monthly fee.
I used to think owning the system was always better. Now? If cash flow is tight, a subscription model might get you there faster.
Is This Strategy Right for You?
Which Businesses Benefit Most
- Manufacturing (welding, motors, CNCs)
- Data centers (always-on loads)
- Cold storage (compressors = peak killers)
- Logistics hubs (forklift charging spikes)
CapEx vs. OpEx Financial Models
- Own: Higher upfront, more long-term value
- Lease: Lower CapEx, quicker deploy
- Shared Savings: Third-party owns it; you split the savings
Quick Checklist: Are You a Good Candidate
- Paying >$0.25/kW in demand charges?
- On TOU-based rate schedule?
- Have shiftable or flexible load?
- Interested in solar, EV, or backup power?
If you answered yes to 2 or more—let’s talk.
Conclusion
Energy costs are climbing, and the grid’s reliability is shaky—peak shaving and valley filling aren’t just smart anymore, they’re essential. But frankly, one-size-fits-all solutions often fail without a tailored approach. I’ve seen well-meaning systems backfire when they ignore unique facility demands. The truth? Effective energy management means understanding your specific load and goals.
We build custom commercial and industrial energy storage systems designed around your needs. Ready to stop guessing and start saving?
Contact Kamada Power today to craft your perfect energy solution.
FAQ
What is the difference between peak shaving and load shifting?
Peak shaving is about cutting short-term demand spikes. Load shifting (aka valley filling) moves energy use to off-peak times. Both help optimize costs.
Can small businesses benefit from peak shaving and valley filling?
Absolutely. Any facility with spiky loads or TOU pricing can benefit—even a neighborhood gym.
How much can businesses save with battery storage strategies?
Typical savings range from $10,000 to $100,000+ annually, depending on system size and tariff structure.
What kind of batteries are best for valley filling applications?
LFP batteries are ideal due to high cycle life and safe deep discharges. Look for high DoD and stable thermal behavior.
Do I need AI-based EMS to start?
Not at all. Many systems begin with rule-based or semi-automated controls. AI just adds long-term optimization.