Demand Charge Savings Calculator

Work out demand charge savings instantly with clear inputs, formula shown and shareable results.

About Demand Charge Savings Calculator

Where demand is billed in kVA, improving power factor cuts apparent power for the same useful load: kVA = kW / power factor. Correcting from 0.88 to 0.99 reduces billed demand by about 11% with no change in production. Contract utilisation shows whether the sanctioned demand itself can be reduced.

Formulas

Apparent power

kVA = kW / power factor

Saving

Saving = (kVA now - kW / target power factor) x demand rate

Worked example

With the default values below, Demand Charge Savings Calculator returns Monthly Saving From Power Factor Correction of $80,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Billed Maximum Demandminimum 0 kVA: 1,800 kVA
Contract Demandminimum 0 kVA: 2,000 kVA
Demand Charge Rateminimum 0 per kVA per month: 400 per kVA per month
Power Factoraccepts 0.1–1: 0.88

Results

Monthly Saving From Power Factor Correction: $80,000.00
Active Power: 1,584.00
Apparent Power At 0.99 Power Factor: 1,600.00
Contract Demand Utilisation: 90.00%

Step by step

1Values used
2Apparent power
3Saving
4Monthly Saving From Power Factor Correction= 80,000.00
5Active Power= 1,584.00
6Apparent Power At 0.99 Power Factor= 1,600.00
7Contract Demand Utilisation= 90.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is power factor corrected?

By capacitor banks or active filters sized to supply the reactive power the load draws. Automatic switched banks are needed where load varies, and harmonics must be checked to avoid resonance.

Should contract demand be reduced?

If utilisation is persistently below about 80%, yes — but reducing it caps the load that can be drawn, and exceeding the new contract triggers penalty charges. Review the load profile including growth first.