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The Difference Between Electricity Demand and Electricity Consumption

June 6, 2017

During conversations with energy managers, facility managers, and other professionals in the buildings industry, references to a facility’s electricity demand and electricity consumption are often brought up. So what’s the difference? Knowing the difference between these two terms is important for understanding how electricity is measured and billed by your utility as well as how to reduce your overall electricity costs.

Demand vs. Consumption

Electricity demand is measured in kilowatts (kW) and represents the rate at which electricity is consumed. Electricity consumption, on the other hand, is measured in kilowatt-hours (kWh) and represents the amount of electricity that has been consumed over a certain time period.

For example, a 10 W LED will always demand 10 W from the grid when it’s on. However, the LED’s energy consumption will range depending on the number of hours it is on. If the LED is on for 10 hours, it’s consumption would be 10 W x 10 hours or 100 Wh.

Understanding electricity use can be compared to driving a car. The rate at which you are consuming electricity (demand, or kW) is equivalent to the speed you are driving the car (mph). Your overall consumption (kWh) is similar to the total distance driven in the car (miles). Electricity consumption is dependent on how many hours your equipment was on - multiply demand by time in use and you get consumption. In a car, you calculate your total distance the same way - multiply the average speed by the number of hours driven.

Why does this matter?

Many utilities charge for electricity demand in commercial buildings based on peak demand, which is the highest average demand during a specific period in the utility cycle, typically a 15-minute interval. For example, if your building’s demand profile is usually around 100 kW, except for one 15-min interval when the demand was 200 kW, the utility would base their calculations on 200 kW. Why is this? Because the utility must be able to deliver electricity to meet your building’s peak demand and maintain reliability on the grid, therefore, they charge higher rates to encourage users to reduce demand.

For electricity consumption in commercial buildings, often utilities calculate consumption based on time-of-use pricing, which means electricity rates are different depending on the time of day. During the summer, peak times are generally on weekday afternoons between 2pm and 6pm. During the winter, peak times are generally on weekday mornings between 9am and 12pm and weekday evenings, between 5pm and 8pm. During peak times, the utility charges a higher rate to encourage users to reduce their consumption.

Lucid’s BuildingOS can provide you with a visualization of your building’s energy demand and energy consumption over time. For example, utilizing the Trend Analysis app, you can view a single day or single week’s worth of real-time data for a building. With this information in hand, you can view the trends in electricity demand and consumption over time, determine which time periods had the highest demand and consumption, and pinpoint areas of improvement.

Daily:

Weekly:

The dark gold line represents the building’s electricity demand (kW), while the gold shaded area under the line is the building’s energy consumption (kWh).
The dark gold line represents the building’s electricity demand (kW), while the gold shaded area under the line is the building’s energy consumption (kWh).

Once you know what period of the day or week your building’s electricity demand is the highest, you can begin to take steps toward reducing demand or shifting demand to a different time period, thereby reducing electricity costs. Similarly, once you know what period of the day or week your building’s consumption is the highest, you can begin to take steps toward pinpointing what end uses in the building (e.g. HVAC, lighting, or plug load) might contribute to this high consumption and take steps to reduce consumption.

Looking for ways to visualize your buildings’ energy demand and consumption? Learn more about Lucid’s BuildingOS by requesting a demo.

See how to visualize your energy demand and consumption.