Vocab Lesson: On-Peak, Off-Peak

Through recent industry events and conversations with consumers it has come to my attention that there are some electricity grid fundamentals that the industry insiders take for granted and we consumers never even consider. One such fundamental is that of baseload generation and its counterpart, peaking generation. In this post I’ll outline these principles and touch on what they mean to you, as a consumer of electricity.


First, the basics:
When we look at energy consumption curves, they reveal particular times of the day when we tend to use lots of energy, and other times of the day when we use very little energy. For instance, in the winter months here in South, where lots of people have electric furnaces, there is a spike in energy use at around 7 or 8 AM when lots of the furnaces come on to warm up homes and offices after a cool night. Then, as the day warms, energy use subsides as the furnaces are used less. Again in the evening, as it gets cold there might be another spike. The periods of high energy demand are called “on-peak hours” and the low-energy use periods are “off-peak.” As you might imagine there are lots of different ways to characterize these periods. Some utility companies have off-peak, medium-peak, and high-peak periods for instance. The basic premise remains the same: our collective energy use over any given day is not a flat line. And the peak and off-peak hours change with the seasons and even with the day of the week (weekends being different than weekdays).


Why does it matter?
It turns out that certain sources of energy are best suited to meet certain types of demand.

If we are painting with a fat brush, our electricity generation pie looks like this:

What the pie fails to represent is the temporal characteristics of various fuels’ usage. It turns out that coal plants are very difficult to start and stop. Furthermore, they are happiest when plugging along at a constant output. Think of a coal power plant as a campfire. Keep shoveling in the coal, and it keeps pumping out the power. Like a campfire though, it’s tough to quickly turn down, turn off or crank up a coal plant. For that reason, coal power plants are best suited to meet the minimum, mostly constant, baseline power needs of the grid, aka baseload power. Nuclear plants are similarly suited to baseload generation. Hydroelectric is also usually considered a baseload.

Natural Gas plants, on the other hand, run like a car engine. In the case of a gas plant, when you turn on an electric appliance, the power plant instantly responds by pumping out more energy. Turning on an appliance is like stepping on a car’s accelerator, the power plant just works a little harder and burns more fuel to power the appliance. This relative nimbleness makes natural gas plants ideal for on-peak generation. Such power plants are called peaking or peaker plants. As you can probably imagine, these peaking power plants tend to be much more expensive to operate than the baseload plants so they are only used when needed. This cost discrepancy is the basis for utilities offering time of use billing plans… more on that in a future post.

What does this mean for you?
The implications for you depend in part on your goals. If you want to save money on your electric bills, shifting your energy usage to off-peak hours can save you serious cash. This gets into time of use billing plans (once again the subject of a future post) but I can hit the key points here. Time of use billing is already available in some parts of the country. If you can handle the inconvenience of shifting your demand to your utility’s off-peak hours, opting in to time-of-use billing can be great. In my case, by shifting my demand to off-peak hours I pay about 30% less per kwh than I would if I were on a standard billing plan. If TOU billing isn’t available to you, shifting your demand to off-peak hours still helps your utility to run more efficiently and theoretically keep your bills low.

If you’re more interested in environmental concerns, simply shifting demand to off-peak hours may not help the cause. In fact, if such a shift means more coal and less natural gas you may actually be doing more harm than good! Natural gas plants after all emit about half the CO2, one-third the NOx and almost no SOx and Mercury. I suspect there is a win-win opportunity here to shift our demand to those off-peak hours that are best met by renewable sources. Does your area have lots of solar power? If so, consuming in the few hours on both sides of noon makes good environmental sense. Do you live near wind turbines? Perhaps you should try and run your dishwasher when it’s windy. In truth, this type of demand shift might encourage renewable generation as much as paying extra for it on your electric bill.

In theory, if we all shift demand properly, utilities will run more efficiently, and we’ll all get lower rates and maybe some cleaner power too!