Demand charges usually apply to commercial and industrial customers that pay time-of-use rates and at certain bill sizes.

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Depending on how much electricity your business uses, and how your business uses electricity throughout the day, your monthly electricity bill may have two parts: 1) Energy charges—for the total amount of electricity you use 2) Demand charges—for “peak usage”

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Demand charges are based on the highest 15-minute average usage recorded on the demand meter within a given month. If your facility tends to use a lot of power over short periods, your demand charges will comprise a larger part of your bill (typically between 30 and 70 percent). If you use power at a more consistent rate throughout the month, your demand charges will generally be a smaller part of your bill.

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The curve created by the up and down movement of your monthly energy bills is called the load profile. Businesses with a lot of fluctuation have a "spiky" load associated with drastic shifts throughout the day in how much energy they are consuming. Storage helps reduce that spike.