Application Note:

Enterprise Energy Management: Demand Control

Introduction....................................................................................................................................1
Demand Calculations......................................................................................................................................... 1
Enterprise-Wide Load Profiles......................................................................................................................... 2
Required Components ...................................................................................................................3
Reducing Demand .........................................................................................................................3
Load Scheduling for Demand Control ........................................................................................................... 4
Generation for Demand Control..................................................................................................................... 5
Load Shedding for Demand Control .............................................................................................................. 7
Summary.........................................................................................................................................9

Introduction
Demand Control is a method of controlling energy costs by limiting the amount of power
drawn from the electricity grid.
All users are charged for energy consumption, the actual kWh used in a given billing
period. For commercial and industrial energy consumers, another parameter is added to
the total charged: the customer’s highest level of energy usage, or peak demand. This
additional parameter acts as a capacity charge, paying for the infrastructure required by the
utility to deliver the peak demand level.
These additional charges typically account for about 25% of a customer’s bill. Demand
control allows energy consumers to minimize these demand peaks and regulate power
usage across their entire enterprise, reducing extra demand charges and lowering long-term
energy costs.

Demand Calculations
Demand charges can be calculated in a number of ways, depending on the utility tariff
document, which is a formal document filed and approved by the Public Utilities
Commission or similar agency for the region. The calculations can involve:
• peak demand during the previous month
• average usage over a set period of months
• seasonal variations
• time-of-day variations
• ratchet charges

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 For example, a customer located in a warm-weather region might have their demand
charge set by an average of their usage over the summer months, when usage is typically
highest. There may also be additional charges per kW for usage during peak time-of-day
hours (for example, 9 a.m. to 5 p.m.).

With ratchet clauses, the customer’s minimum demand charge is set using one or more of
the elements outlined above; this minimum charge is the least amount the customer will
pay, regardless of their actual energy consumption during the billing period. Levels are
constructed above this minimum level, so that if a customer’s usage exceeds a given level,
there are additional charges. These charges increase as the peak demand level increases.

If a customer has uneven power usage with just one excessive demand peak, demand
charges can account for even more than 25% of their utility costs.

Enterprise-Wide Load Profiles

Reducing the demand portion of a facility’s utility bill requires an understanding of the
various components that make up the peak demand. The first step in understanding
demand is creating a system to measure it: an enterprise-wide load profile. This is
accomplished by installing an intelligent ION meter, such as an ION 8500 meter, on the
main service entrance to the facility. The meter uses a series of 15-minute energy
measurement windows, each of which is broken into a number of sub-intervals. During
the sub-intervals, energy usage is measured in kWh and instantaneous kW is averaged to
obtain demand levels.
The 15-minute periods aren’t static however; each is comprised of the current sub-interval
and a number of previous sub-intervals. As the time window slides or “rolls” along, the
oldest sub-interval is dropped as a new one is added.

NOTE:

Rolling windows are necessary because static (fixed) 15-minute periods could result in inaccurately low peak
demand readings for usage that straddles the boundary between two intervals. In that case, if usage were
twice the maximum threshold for half of each of the two intervals, it would still average out to less than the
threshold within each interval.

Additional meters, such as the ION 7500 meter, ION 7300 series meters or ION 6200
meter, are used to sub-meter feeds, individual production lines or equipment to determine
the coincidental demands that result in the overall peak facility demands.
Information from all meters is collated by ION Enterprise software for analysis and
examination in an enterprise energy management system.

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Required Components
An enterprise energy management system with demand control functionality requires the
following components:
• A service entrance meter such as one of the ION 8000 series of meters
• Meters for sub-metering individual feeds, with on-board memory and setpoints, digital
outputs and Modbus RTU slave protocol (if a PLC is used), such as ION 6200 meters,
ION 7300 series meters or ION 7500/7600 meters
• ION Enterprise software for data gathering, analysis, reporting and user-programmed
demand control algorithms
• Ethernet, RS-485 or RS-232 links between ION Enterprise, ION meters and PLCs (if
used)
• Optional: a PLC (programmable logic controller) for user-programmed demand
control algorithms

NOTE:

Choosing a communications link depends on the distance between the two devices to be connected. RS-
232 is good up to a maximum distance of 50 feet; RS-485 can cover up to a maximum distance of 4,000
feet; the range of an Ethernet link is dependent on a network’s hub/router configuration and the specific
type of medium used.

Reducing Demand
As load profile information is received, ION Enterprise software or the ION meter
compares the average power usage for each 15-minute interval to the threshold (maximum
usage level) set by the operator. Operators will generally set their demand usage thresholds
lower than the actual utility threshold to ensure that the utility threshold is never crossed,
because crossing it means a significant increase in costs.
When demand information is available for comparison to the utility’s threshold, customers
can take action to reduce the demand from the utility before the threshold is reached. This
reduces their highest level of demand and is called peak shaving. Because customers pay a
tariff based on their maximum power usage level, lowering the “peak” lowers costs.

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 kW

Peak Demand

Peak Usage
rescheduled
to fit under
lower threshold
Shaved Peak
Demand

time

Figure 1 Illustration of peak shaving, demonstrating how re-allocating tasks from peak usage time to
lower-usage time can decrease overall capacity charges.

There are a number of peak-shaving methods available to consumers, including:

• Load scheduling
• Generation
• Load shedding

Load Scheduling for Demand Control

Load scheduling involves organizing processes into a set schedule so as not to exceed an
demand threshold. This is accomplished by collecting metering system data over a period
of time (day-ahead, weeks, months or years), and using an enterprise energy management
system to analyze it for peaks and lows, compare the to business processes and match
energy costs (including demand) to these processes. The business processes can then be
rearranged to create a lower overall demand profile. However, this approach is only
feasible when energy usage occurs in a relatively consistent pattern across a set period of
time. For example, a manufacturing plant could schedule production line start-ups at
different times of the day so that not all the lines are running at the same time and not all
the equipment starts up at the same time.

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 kW kW Peak Usage
rescheduled
Load Load Load to fit under
1 2 3 lower threshold

Load Load Load Load Load Load Load Load Load

4 5 6 1 2 3 4 5 6

time time

Figure 2 Load scheduling. By scheduling non-time-sensitive loads to run sequentially rather than
concurrently, capacity at any given time can be reduced, which in turn reduces demand
penalties.

For customers with less consistent usage, load scheduling could be enabled through the
use of lockouts. If a customer has 5 major loads and any two of them will bring the level
of usage close to the threshold, the system can be set up to ensure that if any two loads are
active, the other three are locked out, and unable to start up until one of the two active
loads is dropped.
A basic load scheduling system involves a number of elements:
• An ION meter with comprehensive metering functionality, attached to the service
entrance to monitor overall level of demand and control other meters if necessary
(through Modbus master capabilities)
• ION meters with digital inputs and outputs (I/O) to control or lock out specific loads
• ION Enterprise software
• PLCs, for an automated system, depending on complexity
• RS-232, RS-485 or Ethernet connections between meters, PLCs and software
When it is time for a specific load to be brought online, ION Enterprise software either
sends out an alert to a human operator to manually turn on the load, or in an automated
system, the ION meters, which are connected to PLCs that control each of the loads,
direct the PLC software to start up the loads directly. The same control system terminates
a load when its scheduled run time is completed.
With a lockout system, ION Enterprise software, the ION meters or the PLCs are
programmed to only allow a specific number and/or combination of loads at any given
time. Any combination of loads can be activated, but once the maximum load level is
reached, any demand that contravenes the programmed limit would be ignored (i.e. the
load would not receive power).

Generation for Demand Control

Another form of peak shaving is generation. A customer sets up an auxiliary on-site
generator that can be started (either automatically or manually) when power usage
approaches the maximum usage threshold. Because it supplements the available power, it

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 does not necessarily require decisions about load usage or timing, as is the case with load
scheduling and load shedding. However, it does require decisions based on economic
considerations, such as the cost of fuel for the generator versus the cost of a higher
demand charge.
For generation, you require:
• ION meters with comprehensive metering functionality, attached to the service
entrance and to the generator control systems (possibly through a PLC)
• PLCs (if using an automated system)
• RS-232, RS-485 or Ethernet connections between meters, PLCs and software
• Generator(s), with generator switchgear Optional ION Enterprise software

ION Enterprise

PLC and Genset

Utility Feed
ION 7600
Interconnection
Point

Load 1 Load 2 Load 3

Figure 3 Simple system of generation for demand control. By turning on the generator when demand
reaches a certain level, consumers can reduce their demand penalties by keeping their usage
under a set limit. Thin black lines represent power flow; thicker gray lines show communications.

When the ION meter on the utility feed or ION Enterprise software detects a situation
that requires supplementary power, it sends a message that the generator needs to be
turned on.
The message can be sent to a human operator who manually initiates generator functions,
or to the generator-feed meter, which in turn prompts a PLC connected to the generator
controls to turn the generator on. The PLC can turn the generator on or off, monitor the
generator’s functions from the generator control (like heating, cooling, fuel status and
internal functions), or trigger alarms when necessary.

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 Once the generator has been turned on, the power flows from the generator through an
interconnection point, which synchronizes the two power sources (utility feed and
generator), then directs it out to loads requiring power. This interconnection point can be
part of the utility’s system or it can be a customer-owned generator breaker.

NOTE:

Programmable Logic Controllers (PLCs) are intelligent devices designed to control one or more pieces of
equipment. PLCs have simple display facilities, typically showing status only; this information and more can
also be retrieved through ION Enterprise or an ION meter, using the Modbus protocol for the
communication with the PLC. The meters can display the PLC data, allowing operators to view the PLC
conditions directly from the meter. While ION meters can be used as direct controllers, PLCs are generally
recommended. Since they would be used in a simple logic function, their response time for control
functions, like on/off decisions, is faster. In an ideal system, the metering system would make high-level
decisions about what needs to be done, while the PLCs would determine how to carry out those decisions.

Once the initiate command has been sent to the PLC and the generator has been started,
the meters and/or ION Enterprise software continues to monitor the demand level on the
utility power supply. If it drops significantly below the threshold level, the software will
notify the PLCs to turn off the generator.

Load Shedding for Demand Control

As with generator control, in load shedding, the metering equipment monitors the demand
level and compares it to a set (programmed) maximum level.
When the customer’s demand levels approach the maximum usage limit, the metering
system can automatically turn off non-critical systems, using a pre-set matrix to determine
which loads are disposable at the given time. (This requires the use of scheduler modules
and some form of I/O to detect availability.) When the usage level declines, the loads are
brought back online. Load shedding can also be implemented with an alarm system that
pages a human operator to take action rather than automatically controlling the loads.
For load shedding, you require:
• An ION meter with Modbus master and/or I/O attached to the service entrance to
monitor overall level of demand
• Secondary ION meters to monitor individual loads (can act as Modbus slaves)
• ION Enterprise software
• PLCs if using an automated system
• RS-232, RS-485 or Ethernet connections between meters, PLCs and software

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 Utility Feed

Primary Server
As an alternative solution,
ION Enterprise can act
ION 7600 as the Modbus Master
Modbus Master

ION 7350s
Modbus Slaves

Loads 1-4 Load 5 Loads 6-7 Load 8

Non-critical Load Non-critical Load Non-critical Load Critical Load

Figure 4 System configured for load shedding. By monitoring overall use through the ION 7600 Modbus
Master, non-critical loads can be turned off automatically whenever a demand peak is
approached. Thin black lines represent power flow; thicker gray lines show communications.

Load shedding requires an ION meter connected to the service entrance, and either ION
meters or PLCs on each load to be monitored and controlled. The main meter is
connected to the ION Enterprise software through RS-232, RS-485 or Ethernet
connections; specific loads are sub-metered individually, and can be controlled through
PLCs.
Enterprise energy management software, like ION Enterprise, collects data from all
meters in the system. When it detects a power usage level that must be curtailed, it decides
which loads to shed, based on complex algorithms that account for time and conditions of
various loads. For example, an air conditioning system might be an expendable load, but
only when temperatures within the facility are below a certain point.
For manual systems, the information is fed to the resident demand control system (DCS)
for display on the operator console or to be sent to a pager. The operator would then use
the DCS to shed loads.
For automatic systems, ION Enterprise would send commands to individual meters using
the ION protocol, and these meters would in turn shed the loads they control by opening
their onboard contacts.
In some very simple schemes, it is possible to do demand control directly from the main
meter, without enterprise energy management software. In this case, the service entrance

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 meter can either shed the load directly by opening its onboard contacts, or it can use
Modbus master to control meters located closer to specific loads.

Summary
Energy costs represent a very significant amount of the operations costs for many large
commercial and industrial customers, and demand charges can make up a large portion of
this expenditure. An ION enterprise energy management system is an effective way to
minimize demand charges by actively managing and scheduling loads and generation to
flatten the overall load profile.

Tel: 1-250-652-7100
Fax: 1-250-652-0411
Email: sales@pwrm.com
Toll-free: 1-866-466-7627
866-ION-SMART
www.pwrm.com

ION and ION Enterprise are trademarks of Power Measurement.

All other trademarks are the property of their respective owners. Information contained herein is subject to change without notice.
Revision date: May 2002 MRP #70030-0208 © Power Measurement. All rights reserved.

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