Demand charge
The portion of an industrial electricity bill based on the site's peak draw rather than total consumption.
A demand charge is the portion of an industrial electricity bill that's based on the site's peak draw during the billing period, rather than total consumption. Typically measured as the site's highest 15-minute or 30-minute average kW or kVA during the month.
Demand charges exist because building and maintaining grid infrastructure to serve peak load is much more expensive than serving average load. Networks recover the peak-related cost via the demand-charge component.
In Australia's NEM, demand charges are set on either kVA (apparent power) or kW (real power) depending on the specific distribution network. In Singapore, MSSL and Contestable tariffs both include peak-window pricing that has a similar effect.
Demand-charge reduction is one of the two largest levers on an industrial energy bill - and it's the one battery dispatch targets most directly through peak shaving.