What Is Peak Shaving With Battery Storage?

Electricity prices continue to rise, yet modern homes have no shortage of energy-hungry appliances. You don’t have to forego comfort or entertainment, though. By storing power during off-peak hours, peak shaving with battery storage can significantly reduce your energy bills.

Wondering how you can benefit? Our guide will cover:

• Understanding peak shaving
• How peak shaving can help you get more out of your battery storage system
• Combining solar energy and peak shaving with battery storage
• Financial incentives and rebates
• Is peak shaving right for your home?

By the end, you’ll understand how to leverage peak shaving in your own home.

Understanding Peak Shaving

So, what is peak shaving, and how can you use it to reduce your energy bills? Well, most electricity providers charge different rates depending on the time of day, reflecting the cost to supply energy when demand is highest. Peak shaving simply means cutting down on the power you use during these periods.

However, avoiding electricity use at certain hours isn’t always possible. This is where battery storage helps because you can draw and store electricity at off-peak rates for use during peak hours.

How Peak Shaving Helps You Get More Value Out of Battery Storage Systems

Homeowners often install a battery system to complement their solar panels. However, batteries are useful even if you still rely on the electricity grid for your energy needs.

To illustrate why, consider how expensive energy can be during peak hours. For example, Xcel Energy in Colorado currently charges 21c per kWh for electricity usage from 3 p.m. to 7 p.m. in winter but only 12c for most of the day outside this period. 

Running power-hungry appliances like dryers, air conditioners, or ovens during peak hours can inflate your energy bill. However, you can use peak shaving to save money by drawing and storing the power you need when it’s cheapest.

Combining Solar Energy and Peak Shaving With Battery Storage

Solar panels typically generate the most electricity around midday, whereas peak hours span from late afternoon to early evening. This means that solar panels synergize well with battery storage since your system will produce lots of electricity right before peak hours. When the sun goes down, you can avoid drawing from the grid by relying on your battery storage until you pass peak hours.

Of course, this is only possible with solar and a battery storage system. Here at Photon Brothers, we can install both, and we’re experts at customizing systems.

Financial Incentives and Rebates

You’ll need a battery storage system to take advantage of peak shaving. Luckily, depending on where you live, several financial incentives can help lower costs, making energy storage more accessible.

For example, the Federal Solar Investment Tax Credit is available nationwide. It offers a 30% tax credit on the cost of solar and battery systems. However, for this credit to apply, your batteries must be part of a solar system.

Individual states also offer programs. In Colorado, for example, you can take advantage of Xcel Energy’s Battery Connect Program, which provides substantial cashback on the installation cost of batteries. In exchange, homeowners contribute to grid power through their battery storage during peak demand periods.

Is Peak Shaving Right for Your Home?

Whether peak shaving with battery storage is right for your home will depend on your usage patterns and whether your energy provider offers time-of-use rates. In many cases, you can actually opt out of TOU rates by paying a slightly higher base energy rate.

However, for households with lots of electronics and appliances, peak shaving often enables a better deal overall. This is because it saves you a few cents off the fixed opt-out rate.

In Colorado, for example, the average home uses 723 kWh of electricity per month, and Xcel’s opt-out rate in summer is 4 cents higher than its off-peak rate. Peak shaving saves over $28 a month, increasing with higher energy use.