Demand Ratchets, Standby Charges and the Tariff Clauses That Change Your Project ROI
By Kevin Topdjian
Four tariff clauses regularly move the answer on a battery or solar project. They sit in the tariff sheet, and few project models include them.
Project models for batteries, solar and controls usually start with a rate and a load profile. The tariff has more in it than the rate. Four clauses regularly move the answer, and they are worth reading before the model is built.
Demand ratchets
Many commercial and industrial tariffs bill demand on a percentage of the highest peak set in the trailing 11 to 12 months. One bad 15-minute window then prices the rest of the year. A battery that shaves the summer peak is worth more than its single-month savings suggest, and a single missed event can undo it.
Ratchet season
Some tariffs set the ratchet on summer peaks only. A hot-afternoon equipment test in July can price the following winter. Schedule commissioning and trial runs with that in mind.
Standby and backup charges
Onsite generation or storage often triggers standby charges that were not in the pro forma. Ask the utility for the schedule that applies to your configuration before the investment case is final.
Net billing versus net metering
Midday solar exports and evening purchases can be priced differently. That stretches solar payback for facilities that run into the night.
A first step that costs nothing
None of these is hard to find. They sit in the tariff sheet. What is hard is that the tariff sheet, the interval data and the project model are usually owned by three different people, and nobody reads them together.
Pull 12 months of 15-minute data, mark the five highest intervals, and find out which equipment was running. Then read the tariff sheet for the four clauses above. Doing this before you ask a vendor for a quote usually changes the question you ask them.
Clauses and names differ by utility and state. Check your own tariff.
Related reading: What is energy arbitrage? · PJM capacity prices and manufacturers
Related services: Demand Charge Management
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