15 Sep 2021

Everything You Need to Know About Peak Shaving for Manufacturing Facilities

Inside of a manufacturing plant

Peak shaving has been heralded as an innovative way to cap your energy spending and improve power reliability in manufacturing facilities.

But what exactly is peak shaving and when is it right for your business? To find out, we caught up with Catherine Redson, Business Development Manager at Aggreko.

What Is Peak Shaving?

Manufacturing plants tend to need a lot of power to run their operations, but this figure can fluctuate sharply over the course of a month, week, or even a day. This creates headaches for utility providers, who need to make sure that they can always meet the power needs of all their customers at any given moment - even if that means supplying far more than is needed, most of the time. 

As a result, electricity costs for industrial facilities aren’t calculated based on their average usage, but rather the maximum they demanded during that time period - the “maximum peak load” - even if this demand level only lasted a few seconds.

There are two ways for manufacturers in this predicament to keep their utility costs under control. First of all, they can make sure they simply demand less power, either by spreading out production more evenly or by manually throttling production when their machines start guzzling too much power. 

Secondly, they can keep using the same amount of electricity, but when their loads start climbing, they can switch over temporarily to an alternative power source, such as a battery. This means that they don’t demand the entire maximum peak load from the utility provider, but neither do they have to scale back their productivity. This strategy is called peak shaving. 

The peak load shaving meaning is explained below.

“So what a battery can do is have a set point of, say, a little bit above your normal demand,” says Catherine. “When something else kicks in that increases the load, the battery kicks in and shaves that peak. The equipment comes on as normal, but the grid never sees it.”

What Problems Is Peak Shaving Trying to Solve?

As we’ve seen, controlling your utility costs is one benefit for manufacturers. Another major one is reliability, explains Catherine. 

“Some customers come to us with frequent power outages that happen every time a certain machine surges, and their local utility does not have the capacity to solve this problem, because they've got other loads on the transmission line before it gets to this customer,” she says. “So the utility can't solve it and the customer can't not use these machines. The business losses that they're experiencing from these machines cutting off or the power grid going out for even just a few seconds at a time, that trips up everything.” 

“Results range from production delays to spoiled batches, missed orders, and a serious financial hit to the business,” Catherine explains.

How Does It Work in Practice?

One challenge for manufacturers who are considering peak shaving is that they don’t always know exactly what’s causing the shortfall, according to Catherine. It could be that the utility can’t meet demand. It could be, for example, that a load surge from one machine is starving another of the power it needs to run. In any case, identifying the peak (and the source of the peak) can be a complex, but necessary, task.

“Sometimes, in order to really understand what that peak looks like, we have to actually install a data logger,” says Catherine. This, she explains, measures down to the millisecond what's happening on that circuit and shows “in real time” the height of that surge. Depending on the granularity of the reading, the team will then be able to tell how surges compare to average time data and can start to identify exactly where the problem originates. For example, is it an unavoidable spike in demand or, say, a badly performing motor in need of maintenance? Not only does this help Aggreko to diagnose where their system can kick in and shave the peak, but it also gives the customer a chance to fix the root problem for good. 

When Is Peak Shaving a Good Fit for a Manufacturing Plant?

The ideal fit for peak shaving are manufacturers that have what Catherine calls “spiky low profiles”. Typically, these are characterized by the use of heavy machinery or, for food & beverage manufacturers, cooling and refrigeration. These types of equipment tend to run at relatively consistent levels while in use, but will experience sudden surges, for example during power-ups, called in-rush current, or transient load spikes.   

“We don't always know when they're going to happen, so we can't necessarily predict them,” says Catherine. “But the battery doesn't need to predict. It just sits at a set point waiting for that signal, waiting for that demand to cross that threshold. And then it reacts and engages.” 

In other words, from the utility company’s point of view, the manufacturer always has a low profile. It doesn’t see the spikes. 

Are There Any Types of Companies that Should Avoid Peak Shaving?

“When we talk about peak shaving, by definition, you have to have peaks to shave,” says Catherine. “We get a lot of inquiries from customers that have high peak load charges, but when we request the low profile, it's very steady. There aren't large spikes.” 

The problem with these requests is that you can set a point to shave the peak, but with peak shaving battery storage, the battery will only last for 30-60 minutes at a time and are typically sized to supply one full cycle per day, with an hour to recharge. “Batteries won’t do much to reduce a very constant demand profile, with high levels that last for hours and hours. Batteries have a limited duration,” she says. 

Final Thoughts: Looking Forward to Long-Term Savings

When weighing up whether to rent batteries for long periods of time, Catherine points out that the key is to consider the cumulative costs of power outages as well as high demand charges. 

“What happens when a power failure happens?” she says. “How are you currently handling it? If you have to shut down the shift, send people home, restart the machines, lose the batch, do you have any idea what the status quo costs your company? Are you losing business data?”

What’s more, she says, if you work with a vendor that offers a full range of backup and rental equipment, they will be able to design not only a battery solution for peak shaving, but also a complete peak shaving system to ensure constant reliability. That could mean incorporating solar power into the mix and introducing backup generators for longer outages. Not only will these offer huge improvements and savings over time, but if the utility company sufficiently upgrades their service, you can simply hand the equipment back, without the capital spend. 

Catherine believes that this kind of power-as-a-service approach will become more and more popular in the years to come.  

“If you went to a data processing conference 20 years ago and told them that eventually, they would never own their computer infrastructure, they would have it all managed to the cloud and just be paying fees, they would have thought you were crazy,” she says. “Yet here we are today, with Software-as-a-Service, cloud storage, mega data centers. All housing data reliably with the latest technology, all very commonly. I think we're headed in the same direction when it comes to energy.”