Why Businesses Need to Pay Attention to Maximum Demand
Rising electricity costs are becoming a bigger concern for many businesses, especially those with heavy equipment, cooling systems, or fluctuating operational loads. Under Malaysia’s RP4 electricity tariff structure, which took effect on 1 July 2025 and runs until 31 December 2027, businesses are encouraged to manage electricity usage more efficiently.
For many commercial and industrial users, cost is not only affected by total energy consumption in kWh, but also by Maximum Demand (MD). This is why more businesses are looking at peak shaving as a way to control electricity costs.
1) What is Maximum Demand?
- Maximum Demand (MD) is the highest level of electricity demand recorded during a billing period.
- According to myTNB, it is measured in kilowatts (kW).
- MD is based on the highest level of electricity demand recorded during a 30-minute interval in a month.
- This means a short burst of high electricity usage can increase your bill, even if your overall monthly consumption is manageable.
- For non-domestic customers, tariff structures may include both:
- total energy used (kWh)
- demand-related charges based on kW
2) Why does this matter under RP4?
- Under RP4, businesses need to pay closer attention to how and when electricity is used.
- The Energy Commission has also expanded the Time of Use (ToU) structure to encourage more efficient load management.
- If several high-load systems run at the same time, your site may hit a high MD reading.
- This is especially relevant for facilities with:
- Production machinery
- Compressors
- Pumps
- Chillers
- HVAC(Heating, Ventilation, and Air Conditioning) systems
- Large commercial cooling loads
- In these cases, short demand spikes can become a major contributor to electricity cost.
3) What is peak shaving?
- Peak shaving is an energy management strategy used to reduce the highest electricity demand during peak periods.
- Instead of drawing all required power from the grid at once, part of the load is supported by stored energy.
- This is commonly done using a Battery Energy Storage System (BESS).
- The Energy Commission has noted that the Battery Energy Storage System (BESS) is technology that can be used for peak shaving.
4) How does BESS help?
- A BESS stores electricity and discharges when site demand rises above a set threshold.
- In simple terms:
- the battery charges when demand is lower, or when excess solar is available
- the battery discharges during high-demand periods
- the grid sees a lower demand spike
- By reducing the recorded peak, businesses may gain better control over demand-related charges.
5) What are the benefits?
- Better electricity cost control
- Lower peak demand can help reduce charges linked to MD.
- Smoother operations
- BESS can respond quickly to sudden load increases and support a more stable power profile.
- Better use of solar energy
- For sites with solar PV, BESS can store available energy and use it later when demand rises.
A Smarter Way to Manage Electricity Costs
Under RP4, businesses should look beyond total kWh usage. Maximum Demand can be a major cost driver for commercial and industrial sites.
Peak shaving with BESS offers a practical way to reduce demand spikes, improve electricity cost control, and support smarter energy management. For businesses with the right load profile, it can be a useful step toward better energy optimisation.
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