How solar cuts peak demand charges for businesses
Tony Lopes
Short answer: Solar on its own often doesn't reduce a business's demand charge, because the monthly peak can happen early in the morning, after sunset or on a cloudy day. A battery that discharges at those moments, called peak shaving, can. Before you buy one, read the demand line on your bill, find when your peak happens, and check whether simpler load management would do the job.
Last updated November 2026.
On many business electricity bills, the energy you use is only part of the story. A second charge depends on how much power you draw at your single busiest moment of the month. A few minutes of compressors, kilns or HVAC starting together can set that charge for the whole month. This guide explains how demand charges work, why solar panels alone often miss them, and how to judge whether a battery will pay its way. For the wider picture, see commercial and industrial solar.
Can solar reduce a business's peak demand charges?
Sometimes, but not reliably on its own. A demand charge is based on your highest demand in the month, measured in kVA, usually averaged over 30-minute intervals. Solar lowers demand only while it's producing strongly. If the peak lands at 07:30 on a winter morning, at 17:30, or during a storm, the panels contribute little and the charge stays the same.
That doesn't make solar a poor investment for a business. It still cuts the energy charges, which are usually the larger part of the bill. Our guide to commercial solar payback shows the numbers. It just means the demand saving shouldn't be assumed in a proposal without proof from your meter data.
What is a maximum demand charge?
Business tariffs, from Eskom and from municipalities such as City Power, are made up of several kinds of charges. Their names vary by supplier, but they fall into these groups:
| Charge | Based on | Can solar cut it? | Can a battery cut it? |
|---|---|---|---|
| Energy charge | Units used (kWh), often by time of day | Yes | Yes, by moving use out of peak periods |
| Demand charge | Your highest measured kVA in the month, sometimes only in peak and standard periods | Only if the peak happens in strong sun | Yes, if sized and controlled for it |
| Capacity or access charge | The supply size you've agreed with the utility (notified maximum demand), or your highest demand over the past year | No | Only over time, and only if you formally reduce your supply size |
| Fixed service and admin charges | Per day or per month | No | No |
Look on your bill for a line in R per kVA, with a figure such as "maximum demand" or "chargeable demand". Multiply the two and you'll see what one month's peak costs you.
How do you find when your peak happens?
- Get your interval data. Ask your utility or meter-reading company for 12 months of half-hourly readings. Most large business meters record them.
- Find the highest reading each month, and note the day and time.
- Look for a pattern. Is the peak at start-up, at shift change, in the evening, in winter, or on cloudy days?
- Check how short it is. A peak lasting one or two 30-minute intervals is far cheaper to shave than a long plateau.
A typical pattern for a factory or cold store looks like this: demand jumps at 07:00 when machines and compressors start together, stays high but flatter through the day while solar covers part of it, then dips at lunch and rises again around 16:00 to 17:00 as the sun drops.
What does a peak-shaving example look like?
A food processor normally runs at about 130 kVA, but compressors and ovens starting together push it to 180 kVA for about 30 minutes most weekday mornings. For illustration, we've used a demand charge of R250 per kVA a month. Use the rate on your own bill.
| Step | Figure |
|---|---|
| Current monthly demand charge | 180 kVA × R250 = R45,000 |
| Target demand with a battery | Cap at 140 kVA, so the battery covers up to 40 kW for the peak |
| Battery needed | About 50 kW of inverter output and 60 to 100 kWh of storage, allowing for longer peaks and reserve |
| Monthly demand saving | 40 kVA × R250 = R10,000, or about R120,000 a year |
| Other battery savings | Storing midday solar for the expensive evening peak, and backup during outages |
The catch is that one missed peak sets the charge for the whole month. If the battery is flat, or the peak lasts longer than planned, you pay the full charge anyway. That's why peak-shaving batteries need a control system that watches demand in real time, a reserve kept back for the peak, and sizing based on the worst month, not the average.
Are there cheaper ways to cut demand?
Often, yes. Try these before buying a battery:
- Stagger start-ups. Start compressors, chillers and big motors a few minutes apart instead of all at once.
- Fit soft starters or variable speed drives to large motors, which reduce the start-up surge.
- Correct the power factor. Demand is measured in kVA, so a poor power factor inflates it. Capacitor banks can bring it down.
- Shift flexible loads, such as pumping, charging or batch processes, into the middle of the day when solar is strongest.
A battery then only has to deal with what's left, which makes it smaller and cheaper.
When does a peak-shaving battery make sense?
- Your peaks are short, predictable and land outside strong sun.
- Your demand charge per kVA is high.
- The same battery also earns money another way: backup that avoids lost production, cutting generator use, or moving solar into the evening peak.
- You have 12 months of interval data showing the saving, not an estimate.
For warehouses and factories that mostly use power in daylight, start with solar and load management, and add a battery later once real data shows the remaining peaks. Our guide to solar for warehouses and factories covers the rest of the project.
Before you change anything
- Don't reduce your notified maximum demand without advice. If you exceed a lowered limit, penalties can be steep, and getting capacity back can take time.
- Batteries and power factor equipment must be installed by a registered electrical contractor, with a Certificate of Compliance and any grid approvals.
- Check your tariff's terms. Demand charge rules differ between Eskom and each municipality, and change each year.
Frequently Asked Questions
What is a maximum demand charge?
It's a charge in rands per kVA, based on the highest power your business drew in the month, usually averaged over 30 minutes. One short spike can set it for the whole month, which is why it's worth managing.
How big a battery is needed for peak shaving?
The inverter must cover the kW you want to shave off, and the storage must cover how long the peak lasts, plus a reserve. A 40 kW peak lasting 30 to 60 minutes might need around 50 kW of inverter and 60 to 100 kWh of storage. Size it from your interval data, not an estimate.
Does solar reduce network charges?
Network charges billed per kWh fall when you buy fewer units. Network or capacity charges billed per kVA of supply size do not, unless you formally reduce your supply size with the utility.
Where We Fit In
CleanVolts matches businesses with vetted, registered CleanVolts Approved commercial installers. Send us your bills and interval data, and an installer can show you exactly when your peaks happen and whether solar, load management or a battery will cut them. You contract the installer directly. Using CleanVolts costs you nothing, and if the installer pays us a referral fee, we tell you up front.
Sources: Eskom tariff booklet 2026/27.
