Demand charge is a cost based on your factory's peak power draw (kW) over any 15-minute window -- not actual energy consumed (kWh). It can account for 20-30% of a factory bill. TOU splits rates into on-peak/off-peak; TOD adds a partial-peak tier. Solar directly reduces demand charge by generating during on-peak hours.
How Do Demand Charge and Energy Charge Differ?
Factory electricity bills have two main components: Demand Charge (capacity cost) and Energy Charge (consumption cost). Many factory managers only focus on Energy Charge, not realizing Demand Charge can be 20-30% of the total bill.
Think of a water pipe: Demand Charge is the pipe rental fee (bigger pipe = higher cost), while Energy Charge is the water volume used (more water = higher cost). Even if you use less water this month, you still pay full rental for the large pipe.
Demand Charge
Peak power draw (kW) (THB/kW-month)
Energy Charge
Total energy consumed (kWh) (THB/kWh)
| Attribute | Demand Charge | Energy Charge |
|---|---|---|
| Measures | Peak power draw (kW) | Total energy consumed (kWh) |
| Metering window | Highest 15-min average in billing period | Cumulative all month |
| Unit | THB/kW-month | THB/kWh |
| Typical bill share | 20-30% | 50-60% |
| Controllable by solar? | Yes (peak shaving) | Yes (self-consumption) |
| Analogy | Pipe diameter subscription | Water volume used |
Many factory managers focus only on reducing kWh but ignore demand charge -- often the easiest to cut with solar
TOU vs TOD -- Two Rate Structures Every Factory Must Know
TOU (Time of Use)
TOU (Time of Use) splits rates into 2 bands: On-Peak (Mon-Fri 09:00-22:00) at higher rates, and Off-Peak (22:00-09:00 + weekends/holidays) at lower rates. For Cat 3 factories at 12-24 kV, On-Peak is 4.1839 THB/kWh and Off-Peak is 2.6037 THB/kWh (ex-Ft; Ft = 0.1623 THB/kWh May-Aug 2026).
TOD (Time of Day)
TOD (Time of Day) splits rates into 3 bands: On-Peak, Partial-Peak, and Off-Peak. Partial-Peak typically covers evening hours (18:00-22:00). TOD is less common than TOU for Cat 3; mainly used by Cat 4+. For exact TOD rates, contact your local PEA or MEA office.
| Feature | TOU | TOD |
|---|---|---|
| Time bands | 2 (peak/off-peak) | 3 (peak/partial/off-peak) |
| On-Peak definition | Mon-Fri 09:00-22:00 | Mon-Fri 09:00-22:00 |
| Partial-Peak | N/A | Mon-Fri 18:00-22:00 (subset) |
| Off-Peak | 22:00-09:00 + weekends | 22:00-09:00 + weekends |
| Available for | Cat 3+ (optional Cat 3, mandatory Cat 4) | Cat 4+ (optional) |
| Best for solar | Excellent (solar covers full on-peak) | Good (solar covers on-peak, not partial-peak evening) |
| Demand charge | Single flat rate | Split by time band |
PEA and MEA use the same ERC-regulated rates but serve different areas: MEA = Bangkok/Nonthaburi/Samut Prakan; PEA = rest of Thailand.
See full rate tablesHow Peak Demand Affects Your Factory Electricity Bill
Utility meters measure average power (kW) every 15 minutes. The single highest 15-minute reading in the billing period sets your demand charge. In other words: "one spike = charged for the entire month."
Like a speeding ticket: you are charged for the fastest you ever drove, not your average speed.
Demand Charge Rates by Voltage Level
| Voltage Tier | Rate (THB/kW-month) |
|---|---|
| < 12 kV | 210.00 |
| 12-24 kV | 132.93 |
| 22-33 kV | 132.93 |
| >=69 kV | 74.14 |
Source: PEA/ERC May-Aug 2026
Worked Example: Cut 50 kW = Save 79,755 THB/year
Assumptions: Cat 3 TOU at 12-24 kV connection voltage (Demand rate: 132.93 THB/kW)
Before: 200 kW peak demand = 200 x 132.93 = 26,586 THB/month
After (solar peak shaving): 150 kW peak = 150 x 132.93 = 19,940 THB/month
Savings: 6,646 THB/month = 79,755 THB/year from demand reduction alone
The 70% Ratchet Rule -- Why Demand Charge Is Hard to Reduce
Monthly billed demand = MAX(actual measured peak, 70% of highest peak in trailing 12 months). Even if you install solar and reduce your actual peak by 50%, you only see partial demand charge reduction in month 1. Full benefit takes up to 12 months to materialize as the old peak ages out.
"One spike in January means you pay at least 70% of that spike every month until the next January." Fix it now, or pay for 12 months. Every month you delay adds another month of locked-in high demand charges.
Note: Exact ratchet percentage may vary by utility contract. Consult your PEA/MEA office for your specific contract terms.
Common Causes of Demand Spikes
How Solar Reduces Your Demand Charge
Solar panels generate peak output during 10:00-14:00, which falls squarely within the on-peak window (09:00-22:00). The energy solar produces reduces your grid draw, lowering the peak demand recorded by the meter = direct demand charge reduction.
Before/After Comparison: 100 kW Solar System
| Line Item | Without Solar | With 100 kW Solar | Savings |
|---|---|---|---|
| Peak demand from grid | 300 kW | 220 kW | -80 kW |
| Demand charge (132.93/kW) | 39,879 THB | 29,245 THB | 10,634 THB |
| On-peak energy (4.1839/kWh) | ~62,759 THB | ~43,931 THB | ~18,828 THB |
| Off-peak energy (2.6037/kWh) | ~26,037 THB | ~26,037 THB | 0 |
| Monthly total reduction | -- | -- | ~29,462 THB |
Assumptions: 300 kW peak, Cat 3 12-24 kV TOU, 200 working days/yr, 6 hrs avg solar production, 80% self-consumption. NOT including Ft savings.
TOU + solar = double savings: cuts both demand charge (peak shaving) AND energy charge (self-consumption during expensive on-peak hours).
Solar + battery storage can further increase demand charge savings by storing daytime energy and discharging during evening peak.
TOU vs Flat Rate -- Which Is Right for Your Factory?
Not every factory benefits from TOU. Choosing the right rate structure can save tens of thousands to hundreds of thousands per year. Use this decision table to guide your choice.
| Scenario | Recommended | Why |
|---|---|---|
| Factory runs mainly 08:00-17:00, has/plans solar | TOU | Solar covers on-peak; pay less off-peak at night |
| Factory runs 24/7 evenly | Consider Flat Rate | On-peak usage is high proportion; TOU penalty may outweigh benefit |
| Factory runs mainly nights/weekends | TOU | Most usage falls in cheap off-peak band |
| Factory with solar + battery | TOU | Battery handles evening on-peak; maximize off-peak overnight |
| Cat 4 (>=1,000 kW) | TOU (mandatory) | No choice -- but solar makes TOU favorable |
Rule of thumb: if >60% of usage is on-peak without solar, consider flat rate. But with solar (planned or installed), TOU is almost always better.
Switching process: contact local PEA/MEA office, meter change, no fee in most cases.
How to Calculate Your Factory's Demand Charge
Find peak demand on your bill
Look for "Demand" on your PEA/MEA bill. Unit: kW (kilowatts) -- NOT kWh.
Identify your voltage level
Check your connection voltage: < 12 kV, 12-24 kV, 22-33 kV, or >=69 kV. This determines your demand rate per kW.
Find the demand rate for your voltage
< 12 kV: 210.00 THB/kW | 12-24 kV: 132.93 THB/kW | 22-33 kV: 132.93 THB/kW | >=69 kV: 74.14 THB/kW
Multiply peak demand x rate
Formula: Demand Charge = Peak kW x Demand Rate (THB/kW). Example: 200 kW x 132.93 = 26,586 THB/month.
Demand Charge = Peak kW × Rate (THB/kW)Compare with solar projection
Estimate solar peak shaving (typical: 30-50% of rooftop capacity reduces peak). Recalculate with reduced peak. Use our ROI calculator for precise projections.
How to Find Demand Charge on Your Bill
On PEA bills, look for "Demand" in the power demand section (kW). MEA bills show it as "Maximum Demand" or "Peak kW". Look at the kW value, not kWh.
Common Mistakes
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