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An Example of Demand Charges

Wineries & summer/fall seasonal intense operations are subject to extremely high “Demand” charges from PG&E and many other utilities. Specifically in the case of Commercial & Industrial PG&E customers, they often overlook the significance of these unique charges on their power bills. 

Understanding how they’re calculated, and better yet, understanding how to mitigate them is critical to your business success.

First off, notice your PG&E bill consists of three types of charges:
  1. “Customer Charge” which is the fee PG&E charges you for being connected to the grid.
  2. Energy Charges, or Usage is for actual energy used in the given reporting period.
  3. Demand Charges are above and beyond charges unique to C&I customers versus household consumer billing.
The 411 on Demand Charges (specifically for PG&E customers, e.g. many wineries):
  • Demand Charges are separate & additional charges from your Usage charges
  • Demand charges are PG&E’s charge to you monthly for being prepared to provide you the maximum amount of energy required to run your operations.
  • Demand charges include two distinct line items: Max Demand & Max Peak
  • Max Demand is the max kW usage during that billing period, e.g. if 1,050 kW was your highest usage your bill will be 1,050 x $27.10 = $28,455 (B19 summer tariff example)
  • Max Peak Demand is tied to your time-of-use (4-9pm daily) during that billing period, e.g. if your max during 4-9pm window was 800 kW your bill will be 800 x $35.81 = $28,648 (B19 summer tariff example)
  • Remember the above Demand categorized charges are IN ADDITION to charges for energy you actually used, it is the energy used during “demand periods”.

There are limited tactics to change demand rates for future billing cycles.  The obvious method is use less energy (conservation), which is no small task in practical C&I daily operations, but can be as simple as plastic curtain entryways to chilled spaces.  Energy efficiency is the next lowest hanging fruit, e.g. motion active LED’s in the cellar, VFD’s on pumps, etc.

The next most significant way to lower max demand is by minimizing how mh energy you need to consumer from PG&E or your grid operator during peak demand periods. ‘Shaving’ off your energy load to energy produced on-site (not from the grid).  How?

This can be achieved through an onsite energy solution or microgrid. Below is an example of how to mitigate, or “cap” that demand from grid energy .  In this case a CA winery served by PG&E wanted to see the best combination of on-site renewable energy for cost savings and outage resilience, particularly during harvest.

The graph shows the optimal combination of technologies to optimize energy cost savings and resilience for the winery. The black line is the energy consumption needs of the winery, blue bars are the energy needs served by the utility, yellow bars by solar and green bars by battery energy storage. The pink line shows the state of charge of the battery. This is shown over a 24 hr period.With the optimal system installed, Winery XYZ’s electrical load is served by a mix of grid energy, solar and battery which varies over the course of a typical day in July:

As solar production ramps up during the morning hours, the winery stops consuming grid electricity and excess solar is used to charge the battery. As solar production reduces during the evening and demand charges kick in, the battery energy storage system is deployed to power the site, keeping consumption of grid sourced energy flat (to avoid spikes in demand charges) and low (to minimize energy charges).

During the summer months, the optimal energy system for the winery produces more energy than can be used by the site. The best use of this surplus is to sell it back to the grid at the new Net Metering (NEM) 3.0 rates that favor solar & battery combined systems.

In this example, by deploying the optimal onsite energy solution, the winery was able to save $37,000 monthly or $450,000 per year. Meanwhile they increased their operational resilience and reduced their emissions. With rates going up year on year, these savings will only increase over the life of the energy system. What would you do with an extra half a million dollars per year?

  • Tired of seeing your energy bills eroding your margins?
  • Worried about the power going off during harvest?
  • Already have solar and would like to see how solar & battery net out for your specific winery?
  • Just starting to consider options, and don’t know where to start?
  • Want to learn more for your specific operation?

Contact our PG&E and Winery expert Patrick at or