By Lily Fender (MAPC Clean Energy Summer Fellow)
Summer’s almost over, and with it, MAPC is closing out our 12th year of the Peak Demand Management program. Peak demand is the single hour in a year when the New England electric grid experiences its highest demand, typically on a weekday in the summer. The peak tends to correlate with high temperatures/humidity and afternoons when buildings are using the most electricity to power their AC and other loads. The 2026 peak took place on Thursday, July 2 around 7pm and reached 25,361 MW.
What Is the Program?
Municipalities have the opportunity to save money and lower emissions by reducing facility energy usage during times of peak demand.
MAPC's peak demand notification program sends daily emails that assess the risk that the annual peak will occur that day and, if so, at what time. The email also includes an outlook for the next week, so buildings can plan to decrease their load during a predicted peak. You can learn more about the program through our webinar.
Tracking peak demand predictions and taking proactive steps like adjusting thermostats and lights, delaying electric vehicle charging, and limiting appliance usage can save money and lowers emissions for municipal and other facilities.
Savings
Taking steps to limit peak demand can yield savings on your electric bill, including delivery charges (the cost of getting electricity to you) and supply charges (the cost of electricity you use). While demand-related delivery charges are based on each account’s measured peak usage every month, capacity charges are one component of the supply cost which are determined by the energy demand in your facility during the annual peak hour on the grid.
Reducing capacity charges can provide significant savings, but there are other potential opportunities for managing monthly peak demand and earning incentives. Consider battery energy storage systems and enrolling facilities and batteries in utility demand response programs such as the ConnectedSolutions Program (Eversource and National Grid) and ISO-New England's Real Time Demand Response Program.
Frequently Asked Questions:
Question 1: Can you explain the difference between capacity costs and the monthly demand charge that I see on my electric bill?
Answer: Capacity charges are part of supply costs while demand charges are part of delivery/distribution costs.
Most larger municipal facilities will see a “Demand Charge” on electric bills. Each month, utilities gather data on the largest electric demand your building pulls from the grid during a 15-minute period. This can be anytime of the day, and it may or may not coincide with the annual grid peak in that month. This peak monthly demand is multiplied by fixed demand rates (typically “distribution demand charge” and “transmission demand charge”) that are reflected on your bill. It can be challenging to reduce your monthly demand charge without more strategic planning; passive actions such as improving building insulation and adding behind-the-meter solar, or more active steps like using battery storage systems can help.
Capacity charges are different. These are calculated based on a building’s electricity usage during the 1-hour block each year with the highest demand across the entire ISO New England region. This may or may not coincide with your building’s highest load for the year or even the largest demand for the month. With the right planning, reducing your energy usage during the regional peak can reduce your emissions and energy costs. Our peak demand program helps municipalities predict when this 1-hour block will take place so they can plan accordingly.
Question 2: I don’t see a capacity charge on my bill. How do I know if I am saving money by reducing my peak demand load?
Answer:
Capacity charges are one component of your supply charge and depending on your electricity supplier, may not show up as a separate line item on your bill. The extent to which reducing your demand during the peak hour will reduce your electricity bill will depend on how your electricity is supplied.
Electricity suppliers, including utility basic service, suppliers for municipal aggregation programs, and third-party competitive suppliers pay an Installed Capacity (ICAP) charge reflecting all of their customers’ contributions to the annual grid peak. Each individual large facility account also has an “ICAP tag” that reflects your usage during the grid peak hour, which is tracked by your distribution utility.
If your facility uses a third-party competitive supplier, your supplier will take into account your Installed Capacity (ICAP) tag from previous years when offering you a new supply contract. The supplier may give you options that include: (1) paying the capacity charge separately (as a fixed monthly charge) with a lower volumetric (i.e. per kWh) supply rate, or (2) spreading an estimated capacity charge derived from your previous ICAP tags across a higher volumetric supply rate. In either case, your ICAP tag from the previous year(s) will affect the rate that the supplier will offer you.
If your facility receives basic service or participates in a municipal aggregation program, capacity costs are spread out across all customer sales. While reducing your ICAP tags will still bring down capacity costs for all customers, the impact and savings for each facility will be smaller.
Reducing Emissions
During periods of peak demand, the grid relies more heavily on fossil fuel-powered generation to supply electricity (often referred to as “peaker” plants). These resources are less efficient, more expensive, and produce significantly higher greenhouse gas emissions per kWh generated, and reducing our dependence on them is very important.
By reducing your demand during a predicted peak when more fossil fuels are being used, you displace more emissions compared to other times. As a result, each kilowatt-hour (kWh) of electricity saved during a peak period avoids more emissions than the same amount of electricity saved during other periods of time.
When many facilities reduce electricity use during a peak, the grid can reduce the use of fossil fuel generation, lowering emissions and creating a more reliable energy system.
Sign up here for MAPC's Peak Demand Notification Program!
Interested in sharing information about the program? Check out our website for flyers and tips on how to save energy during the annual peak and heat waves.
Questions about the project?
Contact [email protected]