Two plants that use the same kWh in a month can pay very different electricity bills. The difference is when the power is used and how high the peak climbs. Time-of-use prices, demand charges and grid events all reward plants that know which loads can move and which cannot. Demand response and tariff optimization turns that knowledge into a daily routine instead of a monthly surprise. See it on a real load profile in a short peak demand demo.
Keep the Peak Under Your Limit and Get Paid When the Grid Calls
iFactory Peak Demand Manager watches the running 15-minute average against your tariff, moves flexible loads to cheaper hours and handles demand response events from notice to settlement. Production limits set by your engineers always come first.
Five Ways a Tariff Charges You for Power
Most industrial bills mix several charges, and each one rewards a different behaviour. Energy charges price kWh. Demand charges price the highest kW. A survey of US tariffs by NREL describes demand charges as based on the highest average use within a defined interval, usually 15 minutes, and estimates that nearly 5 million US commercial customers could subscribe to tariffs with demand charges above $15 per kW. Read your own tariff sheet line by line with our tariff team.
How a Five-Minute Spike Becomes a Monthly Charge
A demand meter averages power over each interval. On a 15-minute interval, demand in kW equals the kWh used in that interval times four. In the illustration below, the line ran at 4,700 kW for ten minutes, then a compressor and a chiller restarted together and load hit 5,600 kW for five minutes. That gives (4,700 × 10 + 5,600 × 5) ÷ 15 = 5,000 kW, and that one number sets the demand charge for the month. Watch the running average build in a live walkthrough.
Red, Amber and Green Bands Outside the US
Time-of-use pricing is not only a US idea. In Great Britain, Distribution Use of System (DUoS) charges on larger sites use red, amber and green time bands. Modo Energy's guide notes that the red band is typically 16:00 to 19:00 on weekdays and the green band is typically overnight. Each network operator sets its own band times and rates, so the same plant can face a different red band in another region. Check your own bands with our energy team.
DUoS bills on larger sites also carry fixed and capacity charges. Moving load out of the red band cuts the unit rate part, not the capacity part, so size savings on the right line of the bill.
Two Different Jobs That Often Get Mixed Up
Peak shaving lowers the highest interval. Load shifting moves energy from expensive hours to cheap ones. A plant can do one without the other: staggering two motor starts shaves the peak but moves almost no kWh, while running a batch at night shifts kWh but may leave the daytime peak where it was. Most tariffs reward both, so plan them together. Model both on your own data in a tariff session.
- Target: the single highest 15 or 30 minute interval
- Saves on the demand charge and any ratchet
- Tools: staggered starts, held starts, brief sheds
- Acts in minutes, inside the current interval
- Total kWh barely changes
- Target: the hours with the highest price
- Saves on time-of-use and real-time energy prices
- Tools: storage, buffers, batch timing, pre-cooling
- Planned hours or a day ahead
- Same kWh, used at a cheaper time
One Call From the Grid, One Plan Already Ready
When a demand response notice arrives, Peak Demand Manager already knows which loads can move, by how much and for how long. It proposes the plan, holds the line through the event and brings loads back in steps.
Programs, Notice Times and How They Pay
Demand response programs pay plants to cut load when the grid is tight or prices are high. The rules differ by market and change from year to year, so read this as a map, not a contract. The notice times below come from current program documents: PJM, ERCOT's annual ERS report and PG&E's Base Interruptible Program fact sheet. Check which programs your site can join with our program advisors.
Capacity, Energy and How Your Reduction Is Counted
Two plants that cut the same load can be paid very differently, because programs measure the cut in different ways. In PJM's 2025/2026 delivery year, firm service level accounted for 99.7% of committed capacity. CAISO's default for proxy demand resources is a "10 in 10" non-event day baseline. Any move that changes your normal load, such as pre-cooling just before an event, can change the measured result. Test your baseline in a settlement review.
Which Industrial Loads Can Move, and Which Cannot
Load flexibility comes from storage of some kind: chilled water, ice, compressed air, product in a buffer silo, or the thermal mass of a cold store. Without a buffer, moving a load means moving production. Grade every major load once, with operations and quality in the room, and keep the list current as the plant changes. Ask for a blank load register from our support team.
Six Steps From Notice to Settlement
The most common failure in an event is not the cut itself but the recovery. When every load comes back at once, the plant can set a new monthly peak in the first interval after the event. A written playbook keeps curtailment in a fixed order and recovery in steps. Walk through your own event order in a playbook session.
A Worksheet With Assumed Inputs
The worksheet below shows the arithmetic only. Every input is an assumption for illustration, not a result from any plant. Replace each one with figures from your own tariff, interval data and program offer, and check rescheduling costs before you count a saving. Build your own version with our energy analysts.
Take off program penalties for missed events, any overtime from moved batches and the cost of storage you do not already own. Check whether a ratchet still holds billed demand at an older peak.
Peak Demand Manager, Meter Links and AI Server in One Package
iFactory delivers Peak Demand Manager as a turnkey bundle. A pre-configured NVIDIA AI server ships racked and ready with the tariff models, meter connectors and load register pre-loaded, so interval data is read and acted on site. You rack it, plug in power and Ethernet, and the AI is live. To scope it for your site, request a turnkey quote.
- Pre-configured NVIDIA AI edge server, racked and ready
- Connectors for the main meter, sub-meters and BMS
- Tariff model: time-of-use periods, demand interval, ratchet, bands
- Flexible load register with limits set by your engineers
- Demand response notices linked to curtailment plans
- Baseline and settlement report for every event
- 24×7 remote monitoring of models and hardware
Server installed, main meter and sub-meters linked, tariff modelled, load register drafted.
Peak alerts and load moves run in advisory mode, and one test curtailment is run with operations.
Approved moves automated inside limits, program enrolment supported, staff trained.
Utility Tariff Software Built Around Your Loads
Peak Demand Manager starts from your tariff and your process limits, not from a generic savings promise. Our support team can walk you through a pilot plan.
What Plant Managers Ask About Demand Response and Tariffs
Lower the Peak Without Touching the Product
Track every interval, move the loads that can move and answer grid events with a plan. The full system is delivered turnkey and goes live in 6 to 12 weeks.
