Peak shaving is an energy management approach that reduces a facility’s maximum electricity demand during high-load periods. Instead of drawing all required power from the grid when demand spikes, part of the load is supplied by on-site resources such as Battery Energy Storage Systems (BESS), renewable generation, or controlled load reduction. The main objective is to limit the facility’s maximum demand (MD) in kW, which directly influences electricity bills, infrastructure sizing, and grid compliance.

Commercial and industrial electricity tariffs usually include energy charges (kWh) and demand charges (kW). While energy charges depend on total consumption, demand charges are based on the highest demand recorded within 30 min time frame, even if the spike is brief. Equipment startup, HVAC cycling, or production ramp-up can therefore increase monthly costs significantly. Peak shaving addresses this by flattening the load profile and preventing short-duration peaks. Key benefits of peak shaving include lower demand charges, deferred infrastructure upgrades, and improved tariff optimization. Under Malaysia’s Time-of-Use (TOU) structure (peak hours typically 2 pm–10 pm), charging BESS off-peak and discharging during peak periods maximizes savings and reduces grid dependence.

In practice, an Energy Management System (EMS) monitors real-time demand. When load approaches a preset limit, the system triggers corrective action—most commonly battery discharge. For instance, if facility demand reaches 150 kW while the limit is 100 kW, the battery supplies the extra 50 kW so the grid only sees the capped demand. The battery later recharges during off-peak hours. Overall, peak shaving is a proven strategy that enhances cost efficiency, operational stability, and energy sustainability when properly integrated with an intelligent EMS.