An electricity bill is more than the price of energy. For sites connected at medium or high voltage, reserved capacity is a significant part of the distribution charge. It depends not on how much electricity you use, but on how high your demand peaks. That is where battery storage can save money without any change to production.
Reserved capacity in plain terms
Reserved capacity is an amount of power, in kilowatts, that you agree with your distribution system operator. The operator keeps that capacity available for you and charges a fixed amount for it, whether you use all of it or not. The higher the figure, the higher the charge.
It is not the same as reserved input, which reflects the technical size of your grid connection. Reserved capacity is agreed within that limit and can be changed under the rules set by the regulator's price decisions. Low-voltage sites pay according to the rating of their main circuit breaker instead.
Why your highest 15-minute interval matters
At medium- and high-voltage sites, demand is metered in 15-minute intervals, with the meter recording the average power for each one. For reserved capacity, what counts is not the daily or monthly average but the highest of these readings. One quarter-hour in which compressors, furnaces and presses all start together can decide what you pay.
If demand goes above the agreed figure, the operator charges a penalty for the excess, priced well above the reserved capacity itself. Companies therefore play safe and reserve more than their highest peak. They end up paying, month after month, for capacity they need only occasionally.
How storage covers the peaks
Battery storage sits on the site's internal network and watches demand continuously. As demand approaches a set threshold, it starts supplying power and covers the difference from its batteries. The grid only sees what stays below the line.
Delivering a lot of power for a short time is exactly what storage does best. The batteries then recharge at night or in another period of low demand. The controller makes sure that charging does not create a new peak of its own, drawing only as much as fits under the threshold. This is known as valley filling.
Storage is not the only tool. Staggering machine start-ups can also help. Storage comes in where the process does not allow that, or where it would cost output.
An illustrative example: from 940 to 700 kW
Take a factory whose highest 15-minute demand reaches 940 kW, but only during short peaks. Storage covers those peaks, so demand from the grid never goes above 700 kW.
The factory can then reserve 700 kW instead of 940 kW, which is 240 kW less, and agree the new figure with its distribution system operator. This is an illustrative example, not a customer result. What you save depends on your load profile, the price of reserved capacity in your distribution area, and how often and how long your peaks last.
Sizing storage for peaks
For peak shaving, power in kW is what matters. The storage has to deliver at least as much as you want to cut, 240 kW in our example, plus a sensible margin. Energy capacity in kWh then follows from how long the peaks last and how closely they follow one another.
One long peak uses more energy than several short ones with time in between for the batteries to partly recharge. That is why we size storage from real metering data rather than a single figure on an invoice. Our modular system starts with a base module of 243 kWh / 100 kW and scales to 6 MWh in one system, so power and capacity can be put together as needed.
Peak shaving does not keep storage busy all day. In the remaining time it can buy electricity in cheap quarter-hours and release it in dear ones, as we explain in our article on fifteen-minute power prices. The controller simply has to hold back enough energy for the next peak.
What data to prepare
A first estimate needs only a few documents that most companies already have:
- 15-minute metering data, ideally for a full year to capture seasonal swings. It is usually available on your distribution system operator's customer portal.
- Your reserved capacity and reserved input, from your distribution contract.
- Distribution invoices, including any penalties for exceeding reserved capacity.
- Planned changes such as new machinery, EV chargers, heat pumps or solar panels.
- A possible location for the storage and an idea of how it would be connected.
From these we work out how far your reserved capacity can safely come down and how much power the storage needs to get there. For a wider overview of what business storage can do, see battery storage for business.
See how storage shaves peaks over a full day on our energy storage page, or send us your metering data for a first assessment.