The peak demand charge is an incentive to try creative ways to lower the peak electrical use at a facility. Controls are the means to accomplish this end.
Many buildings have been built with an emergency generator sized to handle a portion of the building load, to ensure a safe and speedy exit of the occupants. The National Electrical Code allows this generator to be run to the extent that its regular operation in emergency circumstances is not jeopardized. This is even permitted in hospitals, so long as the emergency generator does not require maintenance more than every three years.
The peak demand may occur for only an hour each day, so running the generator at this time—brought on-line by an automatic transfer switch as the power use approaches the anticipated peak value—will not cause excessive wear on a high-horsepower machine. The savings on demand fees will far more than offset any extra automated controls required to implement this process, especially since the facility must already have an automatic transfer switch.
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Excerpt from Energy Conservation Projects.