Most discussions about commercial solar focus on energy (kWh) savings — the reduction in grid electricity consumption from solar generation. But for large industrial customers on Eskom's Megaflex or Miniflex tariffs, a second and often larger saving opportunity exists: Notified Maximum Demand (NMD) charge reduction. Battery energy storage systems, deployed specifically for peak demand shaving, can deliver returns that frequently outperform a solar-only investment — with a simpler sizing and commissioning process.
Understanding NMD Charges
Eskom's large commercial tariffs include a demand charge component billed monthly per kVA of your highest measured demand during the billing period. The specific structure varies by tariff:
- Megaflex: Network Demand Charge (R/kVA/month) based on highest 30-minute average kVA in each tariff period
- Miniflex: Similar structure with ToU-differentiated demand rates
- Ruraflex / Landrate: Maximum Demand charge (R/kVA/month) on single highest reading
The key insight is that a single 30-minute demand spike — caused by a motor start, a compressor kick-in, or an unexpected process load — sets your demand charge for the entire month. You cannot "average out" a spike with low demand at other times in the same billing period.
Example: A factory with a normal demand of 600kVA experiences a single 850kVA spike during a cold start on Monday morning. That 850kVA figure sets the demand charge for the entire month — even though the factory ran at 600kVA for every other 30-minute interval. Eliminating that one spike saves (850 – 600) × tariff rate = R37,500/month at a Megaflex rate of R150/kVA.
How BESS Peak Shaving Works
A BESS system configured for demand management monitors real-time power draw from the grid via a current transformer (CT) clamp at the point of common coupling. When demand approaches a pre-set threshold (the "setpoint"), the BESS inverter injects power from the battery into the facility's LV busbar — reducing the net grid import and suppressing the measured kVA.
The speed of BESS response is critical. Eskom's demand measurement is based on 30-minute average kVA, sampled continuously. A BESS inverter with a 20ms response time can begin discharging within milliseconds of a demand event — well within the window needed to prevent the spike from elevating the 30-minute average.
Setting the Demand Setpoint
The demand setpoint is the maximum kVA level the BESS is programmed to maintain. Setting it requires analysis of 12 months of interval meter data to identify:
- The distribution of demand readings across all 30-minute intervals
- The frequency and magnitude of demand spikes above the target setpoint
- The energy (kWh) required to suppress each spike to the setpoint level
This analysis determines the required BESS power capacity (kW) and energy capacity (kWh). Over-sizing the setpoint (too conservative) reduces savings; under-sizing it risks demand exceedances that defeat the purpose.
Sizing a BESS for Demand Shaving
| Parameter | How It's Determined |
|---|---|
| Power capacity (kW) | Maximum single-interval spike above setpoint, plus 15% safety margin |
| Energy capacity (kWh) | Duration and frequency of demand events; typically 30–60 minutes of peak shaving capacity |
| Demand setpoint (kVA) | Target demand level, set at 80–90th percentile of historical demand distribution |
| Charge strategy | Recharge during Off-Peak hours to ensure capacity available for next demand event |
The Financial Case
Demand shaving BESS systems are sized and justified entirely on the demand charge saving — solar generation is not required in the model. A standalone demand-shaving BESS is often the right first step for businesses that:
- Have high demand charges relative to energy charges
- Are on a tenanted property where rooftop solar rights are unclear
- Want to prove ROI on battery storage before committing to a full solar+storage investment
Case example: A Johannesburg cold storage facility with average demand of 1.1MVA and demand spikes to 1.6MVA pays approximately R105/kVA/month in Network Demand Charges. Deploying a 600kW/400kWh BESS to hold demand at 1.1MVA saves 500kVA × R105 = R52,500/month = R630,000/year. System cost: R3.8m installed. Simple payback: 6 years. With Section 12B deduction at 27% CIT: effective cost R2.77m, payback 4.4 years.
Stacking Demand Shaving with Solar and Arbitrage
The real power of BESS in a commercial context is value stacking — using the same battery capacity to simultaneously deliver:
- Peak demand shaving (demand charge reduction)
- ToU arbitrage (charge cheap off-peak, discharge expensive peak)
- Solar self-consumption maximisation (store excess solar for evening peak)
- Load-shedding backup (reserve capacity for grid outages)
A well-designed BESS dispatch strategy that stacks all four value streams can improve the economics of a standalone demand-shaving system by 30–60%, without increasing hardware costs.
SOCO ENERGY's EMS platform models all four value streams simultaneously and dynamically dispatches the BESS to maximise total value — not just one metric — in real time.