Understanding Demand

Gas-fired power plant

Definition: Electric demand is a measure of the average rate at which your home or business consumes electricity in a defined time interval. In general, the more electrical devices you operate at one time, the higher your demand.

Why is demand important? Dixie Electric must plan for future growth and design electric power lines, transformers, substations and other equipment to supply the maximum requirement of electricity by all members, whether that requirement is for 15 minutes or for months. Likewise, South Mississippi Electric, Dixie Electric’s generation and transmission cooperative, must plan for and have available adequate generation capacity to meet member’s consumption requirements. Electric demand determines the investment that’s necessary to deliver electricity to any customer when needed. This investment is recovered by allocating demand costs to each member.

The difference between demand and consumption: Demand is how much electricity a member requires at a single moment in time. It is measured in kilowatts (kW). Consumption is how much electricity a member uses over a period of time. This is measured in kilowatt-hours (kWh).

Example 1: The important distinction is that demand is an average measure of the rate of electric use, and consumption is a measure of overall electric use. 

Assume 10 lights, each using a 100-watt bulb, are turned on. This usage would draw or demand 1,000 watts or 1kW of electricity. If the member leaves the lights on for two hours, that would consume two kWhs of electricity. 

Now assume five 100-watt lights are used for six hours. Since only half of the lights are being turn on, the demand is cut in half to 0.5 kW. However, since the five lights ran longer, three kWh or more electricity is consumed. 

Example 2: The car’s speedometer would be like the demand meter and the odometer would be like a consumption meter. Compare two cars traveling the same 100-mile road, one car is traveling 10 miles per hour for 10 hours and the other is traveling 100 miles per hour for one hour. It would take a much more capable and expensive engine to power the car at 100 miles an hour than it does to power the car at 10 miles an hour. 

How to reduce demand charges: In general, there are two strategies for reducing demand. The first option is to change what equipment is on. The second option is to change when the equipment is on.

Reducing the number of devices operating simultaneously will help by reducing the cumulative effect of how many devices need electricity. Upgrading to high-efficiency equipment will also assist in demand reduction.

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