Determine your electricity load factor for your business
Load factor is a measure of how consistently you use energy over a billing period. Energy providers use load factor as a metric to determine the rate you pay for electricity usage (your cost per kWh). Utilities use load factor to determine the tariff classification your business is placed in that determines how much you pay for demand charges. A high load factor is more desirable than a low load factor because it indicates energy efficiency. On the other hand, a low load factor suggest more variation in energy demand, with peak times requiring more power.
This calculator is meant to help you determine your business's load factor. Load factor, demand billing, and energy in general can be confusing. If you have any questions don't be afraid to contact us.
Electrical load factor helps businesses and energy suppliers better manage energy use and performance. In fact, load factor calculations are one of the key factors in determining commercial energy rates. If your business has a high load factor, you'll likely qualify for better electricity rates because your energy management is an advantage for the grid-- even if your total energy use is the same as a business with a low load factor. Improving your business's load factor is also directly correlated to increased energy efficiency for your electric system.
The load factor calculation divides your average demand by your peak demand. To calculate your load factor take the total electricity (KWh) used in the billing period and divide it by the peak demand (KW), then divide by the number of days in the billing cycle, then divide by 24 hours in a day. The result is a ratio between zero and one. You can also use the load factor calculator at the top of this page which utilizes the aforementioned load factor formula.
Load factor varies by industry and many variables. In general a load factor greater than 80% is great, 50%-65% is average, and below 50% is low. Since a higher load factor usually means reduced costs, the higher the load factor the better.
Pro Tip: The average small or medium sized business with a standard daytime schedule will have a load factor between 40%-60%. This includes office buildings, restaurants, schools, and other commercial buildings.
Improving your load factor not only improves energy efficiency of your general business operations, but can also help you qualify for special rates. Remember, load factor is the correlation between energy demand with actual energy usage, so optimizing load factor is crucial for savings.
By using energy more consistently throughout your day you can achieve a higher load factor, especially by exercising demand control to take advantage of off-peak hours. You can also reduce your peak demand by finding other energy management solutions. This can include: signing up for a demand response program with your local utility, completing an energy audit to identify inefficiencies, and installing a building energy management system.
