Engineering Yield: Commercial HVAC Optimization Strategies to Slash Peak Demand Charges
For most large commercial facilities (office towers, malls, hospitals), the electricity bill is divided into two main components: Volume (kWh) and Peak Demand (kW). In 2026, regulated utilities are aggressively increasing Peak Demand charges to offset grid upgrade costs. In constrained zones, Demand Charges can represent 30% to 50% of the total monthly bill. Because high-tonnage HVAC chillers and rooftop units (RTUs) draw massive initial current (in-rush) and run hardest during hot summer afternoons, HVAC optimization is the most potent strategy for flattening the building's load profile and avoiding punitive $25+/kW demand spikes.
Understanding the "Ratchet Clause"
- →The 15-Minute Mistake: If your HVAC system spins up all compressors simultaneously at 2:00 PM on a 100°F day for just 15 minutes, you set a massive kW peak.
- →The Annual Ratchet: Many utility tariffs include a 'ratchet clause'. This means your highest 15-minute summer peak determines your minimum billed demand charge for the *next 11 months*, even in the dead of winter. A single AC spike in July can haunt your budget until next June.
Core Strategies for HVAC Load Flattening
Reducing kW demand does not inherently mean sacrificing occupant comfort. It involves intelligent sequencing via the Building Automation System (BAS) to ensure heavy loads don't overlap.
- 1. Global Temperature Setpoint Drifting (Coast Period): The grid peaks between 3 PM and 6 PM. During this window, slowly drift the building setpoint from 72°F up to 75°F. The building's thermal mass absorbs the heat, keeping occupants comfortable, while drastically reducing chiller compressor load when the grid is most expensive.
- 2. Deep Pre-Cooling (Night Purge): Run the chillers aggressively at 3:00 AM when electricity demand is lowest (and occasionally negatively priced). Cool the building's concrete structural mass down to 68°F. This allows you to deploy the "Coast Period" later in the day.
- 3. Staggered RTU Starting: The morning warm-up/cool-down sequence is a major threat. If a building manager commands all 20 Rooftop Units (RTUs) to 'occupied mode' simultaneously at 7:00 AM, the in-rush motor current creates an instant massive spike. Sequence them to start in 5-minute intervals.
- 4. Variable Frequency Drives (VFDs): Replacing older "constant volume" fans and pumps with VFDs allows the motors to ramp up softly to 40% or 60% capacity based on actual need, rather than slamming to 100% capacity instantly.
Capital Upgrades vs. Control Logic
Medium Cost (Retro-fits): Adding VFDs to existing chilled water pumps and Air Handling Units (AHUs). Typical ROI of 12-18 months based on standard utility rebates.
High Cost (Major Capital): Installing Ice Thermal Storage (calmac tanks). The chillers make ice at night using cheap off-peak power, and during the hot afternoon peak, the chillers turn *off* entirely while the building is cooled by melting the massive block of ice. Drastic kW reduction, but requires significant plumbing overhaul and footprint.
Source: ASHRAE Guideline 36: High-Performance Sequences of Operation for HVAC Systems, DOE Better Buildings Program.
Analyze Your BAS Performance
Are 'ratchet charges' cannibalizing your operational budget? Let our engineering team review your 15-minute interval data to identify the exact cause of your facility's peak demand spikes.