Load Factor: A Simple & Cost Effective Tool to Highlight Savings Opportunities

Follow Up to Recent Webinar- “What’s Your Energy Data Trying To Tell You?”

Energy management professionals spend a fair amount of time and resources searching for actionable data. Many organizations focus on the value of energy efficiency, while demand management is often ignored with significant savings potential left unrealized.
Demand related charges now commonly account for 20% to 50% of annual electricity costs.
For customers with certain usage profiles, managing kW demand during less than one percent (1%) of operating hours can often reduce total electricity costs by more than ten percent (10%).
While an in-depth look at demand cost usually requires interval data and detailed knowledge, the first level of analysis can be determined with a simple load profile analysis. To illustrate the value using just the load profile from a monthly bill, we’ve charted real data from July, 2020 and looked at monthly utility charges for more than 1,200 facilities in ERCOT. We used a simple analysis of load factor % versus non-commodity related tariff and delivery charges. This chart demonstrates the strong correlation between load factor and total cost. The average load factor is 45% with a standard deviation of 27%.
The key item we want you to take away from this information is that:
Less than a single standard deviation improvement (30% to 55%) reduces tariff charges by more than 30%.


Tariff Charges Graph


Clearly there are a lot of other elements at play that influence load factors. These impactful elements include operations, building types, vintage, utilization, and HVAC requirements among others. Still some good questions are, “what’s my load factor, what could it be if we managed it, and how much can that potentially save?”
Before the summer season demand charges and potential seasonal or annual ratchets impact your demand charges for the year, take a quick look at your load factors and demand charges. Feel free to reach out to discuss any of these issues with the team at THG.


We look forward to engaging with you, and learning how we can best support you and your energy management and sustainability goals.


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