---
title: "How behind-the-meter battery storage cuts demand charges | Entogo"
description: "Demand charges are billed on a facility's highest power draw, not its total energy use. Behind-the-meter battery storage discharges during those brief…"
url: https://entogo.ca/insights/cut-demand-charges-with-battery-storage/
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datePublished: 2026-04-15
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---

Home › Insights › How behind-the-meter battery storage cuts demand charges

Energy Storage

# How behind-the-meter battery storage cuts demand charges

Entogo April 15, 2026

![Entogo industrial and commercial integrated liquid-cooled energy storage system cabinet](https://entogo.ca/_astro/Entogo-Industrial-Commercial-Integrated-Liquid-Cooled-Energy-Storage-System.BSrqAAfB_Z1vW6cz.webp)

In short

Demand charges are billed on a facility's highest power draw, not its total energy use. Behind-the-meter battery storage discharges during those brief peaks to cap the demand, and shifts cheap off-peak or solar energy into expensive on-peak hours — lowering both parts of a commercial electricity bill.

For most commercial and industrial facilities, the electricity bill has two very different parts. The **energy charge** pays for total consumption in kilowatt-hours. The **demand charge** pays for the single highest rate of power draw — typically the peak kilowatts averaged over a 15-minute interval anywhere in the month. Demand charges can be a large share of the bill, and they are driven by brief, infrequent spikes rather than steady use. That is precisely the problem behind-the-meter battery storage is built to solve.

## Why demand charges are so painful

A facility can be efficient on a kilowatt-hour basis and still pay heavily for demand. A few minutes of simultaneous operation — a large compressor starting, a fast charger ramping up, a production line at full tilt — can set a peak that is billed for the entire period. The utility has to be ready to supply that peak whenever it occurs, so it charges for the capacity, not just the energy.

Reducing the peak therefore pays off out of proportion to the energy involved. You are not trying to use less electricity overall; you are trying to flatten the moment of highest draw.

## Peak shaving: capping the spike

This is the core mechanism. An energy management system watches the site’s load in real time. As demand climbs toward a threshold, the battery’s power conversion system discharges to supply the difference, so the load the meter sees stays below the cap. When demand falls, the battery recharges — usually during off-peak hours when energy is cheap.

The battery has to be sized on two axes:

- **Power (kW)** — how much of the spike it can offset at once.
- **Energy (kWh)** — how long it can sustain that offset.

A peak that is high but short needs power more than energy; a long, broad peak needs both. Getting this sizing right against the facility’s actual load profile is the difference between a system that shaves the peak and one that runs out mid-event.

## Time-of-use shifting: a second saving

Many tariffs also price energy by time of day. A battery that is already on site for peak shaving can store low-cost off-peak or surplus solar energy and discharge it during expensive on-peak windows. This **time-of-use shifting** attacks the energy charge, stacking a second saving on top of the demand-charge reduction.

## Backup and resilience, included

Because the battery and its controls are already installed behind the meter, the same system can keep critical loads running through grid interruptions and power-quality events. For facilities such as data centres or continuous production, that resilience is part of the value, not an add-on.

## What to bring to a sizing conversation

To size a system well, an engineer needs the facility’s interval load data — ideally a year of 15-minute readings — plus the applicable tariff, any on-site solar, and the loads that must stay up during an outage. From there the battery energy and power, cooling type and integration approach follow.

Entogo’s commercial and industrial storage systems are all-in-one cabinets that integrate the battery, BMS, EMS, power conversion and fire protection, in liquid- or air-cooled formats, and parallel-connect to scale with the load. Installed work is governed by codes including UL 9540, UL 1973 and NFPA 855. Specified against real load data, behind-the-meter storage turns the most punitive line on a commercial bill into a controllable one.

- Energy storage
- Demand charges
- Peak shaving
- Commercial & industrial

Glossary: [Demand charge and peak shaving](https://entogo.ca/glossary/#demand-charge-peak-shaving) [Power conversion system](https://entogo.ca/glossary/#pcs) [Air-cooled vs. liquid-cooled BESS](https://entogo.ca/glossary/#air-cooled-vs-liquid-cooled-bess) [UL 9540 and UL 9540A](https://entogo.ca/glossary/#ul-9540-9540a) [NFPA 855](https://entogo.ca/glossary/#nfpa-855) [Commercial & industrial](https://entogo.ca/glossary/#ci-storage)

FAQ

## Common questions

- **What is a demand charge?**: A demand charge is a component of a commercial or industrial electricity bill based on the facility's highest rate of power draw during the billing period, usually measured in kilowatts over a 15-minute interval. It is billed separately from the energy charge, which is based on total kilowatt-hours consumed.
- **How does a battery reduce demand charges?**: The battery discharges during the short windows when site demand spikes, supplying part of the load from stored energy so the metered peak the utility sees is lower. This is called peak shaving, and because demand charges scale with that peak, capping it directly reduces the charge.
- **Does storage also reduce energy costs?**: Yes. Beyond peak shaving, a battery can store energy off-peak or from on-site solar and discharge it during expensive on-peak hours — time-of-use shifting — which lowers the energy portion of the bill in addition to the demand portion.

Keep reading

## Related insights

[![Commercial battery energy storage system connected to the grid through inverters](https://entogo.ca/_astro/grid-forming-vs-grid-following-inverters-battery-storage.bidzTJDu_Z16fCm6.webp) Energy Storage ### Grid-forming vs. grid-following inverters for battery storage Grid-following inverters follow an existing grid voltage, while grid-forming inverters set their own voltage and frequency so they can ride through weak grids, island, and black-start. Here is how to tell which one a battery storage project needs and what to specify. View](https://entogo.ca/insights/grid-forming-vs-grid-following-inverters-battery-storage/)[![Commercial battery energy storage system paired with rooftop solar at an industrial site](https://entogo.ca/_astro/lfp-vs-nmc-batteries-stationary-storage.D4PePhC4_Z1DbUzj.webp) Energy Storage ### LFP vs. NMC batteries for stationary storage: how to choose LFP and NMC are the two lithium-ion chemistries behind most stationary storage. LFP leads on cycle life, thermal stability and cost per kWh; NMC packs more energy into less space. Here is how to match chemistry to a project. View](https://entogo.ca/insights/lfp-vs-nmc-batteries-stationary-storage/)[![Commercial battery energy storage enclosures with rooftop solar showing thermal management for a BESS installation](https://entogo.ca/_astro/air-cooled-vs-liquid-cooled-battery-storage.CNRAR2SV_2b73rb.webp) Energy Storage ### Air-cooled vs. liquid-cooled battery storage: how to choose Battery cells age faster when they run hot, so a BESS cooling architecture largely decides its lifespan and footprint. Air cooling is simpler and cheaper; liquid cooling holds tighter temperatures for dense, high-throughput sites. Here is how to choose. View](https://entogo.ca/insights/air-cooled-vs-liquid-cooled-battery-storage/)

Project inquiry

## Turn the brief into a specified system.

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