FreeHVACCalculators

Start here

Loading calculators…

Menu

Peak Demand and Demand Charge Calculator

Many commercial electric bills charge for the highest kW you draw each month, not only the kWh you use. See what your cooling equipment adds to that charge.

Method reviewed October 26, 2026. Version 1.0.0. How it works

Your inputs

Unit system

12,000 BTU/h = 1 ton; a 10-ton rooftop unit is 120,000 BTU/h.

Full-load efficiency at 95 °F outdoors (BTU/h per watt) from the AHRI rating or spec sheet. On hotter days the draw is higher.

From your utility tariff ($ per kW per month). $15/kW is the benchmark NREL used in its survey of U.S. demand charges — rates range widely, so enter yours.

Result

Peak demand added
10.26kW
Demand charge per month
$153.85
Demand charges over the cooling season
$615

About 10.3 kW of peak demand: $153.85 a month and $615 over 4 months at $15.00/kW.

  • Demand is usually the highest average kW in any 15-minute interval of the billing period. Units that cycle on together set the peak; staggering their start times can lower it.
  • Residential tariffs rarely have a demand charge. Some tariffs also use ratchets or time-of-use demand windows — check yours.
kW per ton
1.026
Show the working
  1. kW = capacity ÷ EER ÷ 1,000
    120,000 ÷ 11.7 ÷ 1,000 = 10.26 kW
  2. Peak kW = kW per unit × units running together
    10.26 × 1 = 10.26 kW
  3. Monthly demand charge = peak kW × $/kW
    10.26 × $15.00 = $153.85
  4. Season = monthly × months
    $153.85 × 4 = $615.38

How demand charges work

A demand charge is billed on the highest average power drawn in any short interval — usually 15 minutes — during the billing period, multiplied by a rate in dollars per kW. NREL’s survey of U.S. tariffs found that demand charges often make up 30–70 % of a commercial electric bill and that millions of commercial customers can be on tariffs above $15 per kW.

Because the charge follows the single highest interval, a few units all starting together on a hot afternoon can set the month’s bill.

Estimating the cooling peak

An air conditioner’s full-load power is its capacity divided by its EER (or EER2), the efficiency at 95 °F outdoors: a 120,000 BTU/h unit at EER 11.7 draws about 10.3 kW. Multiply by the number of units that run at the same time at the building’s peak, then by the demand rate.

Measured kW is better if you have it. On days hotter than 95 °F, or with dirty coils, the draw is higher than the EER suggests.

Worked example

These are the example values the calculator opens with, and the result the engine calculates for them.

Inputs

Peak power from
Cooling capacity and EER / EER2
Cooling capacity per unit
120,000 BTU/h
EER or EER2
11.7
Units running at the same time at peak
1
Demand charge
15 $/kW
Months in which cooling sets the peak
4

Result

Peak demand added
10.26 kW
Demand charge per month
$153.85
Demand charges over the cooling season
$615
kW per ton
1.026

About 10.3 kW of peak demand: $153.85 a month and $615 over 4 months at $15.00/kW.

Assumptions

  • Peak electrical demand = cooling capacity ÷ EER (BTU/h ÷ BTU/Wh = W) for each unit, times the units that run together at the peak.
  • Demand charge = peak kW × the tariff’s $/kW for each month cooling sets the peak.

Limitations

  • EER is measured at 95 °F; on hotter days, and with dirty coils or low airflow, the draw is higher.
  • The building’s other loads also count toward the peak; this tool shows only what the cooling adds if it runs at the peak time.

Frequently asked questions

Do homes pay demand charges?

Rarely. Most residential tariffs bill only energy (kWh) plus a fixed charge, though some utilities offer residential demand rates. Check your tariff.

How can I lower demand charges from cooling?

Stagger start times so units do not all start together, pre-cool before the peak window, keep coils clean, and choose higher-EER equipment when replacing units.

What is a demand ratchet?

Some tariffs bill a minimum demand based on the highest peak in the previous months. A single summer peak can then raise bills for months afterwards.

Sources

  1. Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges (2017) — NREL and Clean Energy Group (J. McLaren et al.). Demand charges are typically based on the highest average demand (kW) in a defined interval, usually 15 minutes, during the billing period; they often make up 30–70 % of a commercial electric bill; nearly 5 million U.S. commercial customers can subscribe to tariffs with demand charges above $15/kW.
  2. 2023 Central Air Conditioner Standards — FAQ — U.S. DOE, Office of Energy Efficiency & Renewable Energy. Regional SEER2 / EER2 / HSPF2 minimum efficiencies effective 2023.
  3. NIST Guide to the SI (SP 811), Appendix B.9 — conversion factors — National Institute of Standards and Technology. 1 ton of refrigeration = 12,000 BTU/h; 1 BTU/h = 0.2930711 W; 1 atm = 101.325 kPa.

Spotted an error? Report a problem with this calculator — see our corrections policy.