Peak Shaving Contract
A peak shaving contract compensates behind-the-meter resources for reducing load during system peaks defined by utilities or capacity markets. Contracts specify measurement windows, notification lead times, and settlement formulas tied to avoided demand charges or capacity costs.
Industrial customers deploy battery storage, thermal storage, or process controls to meet contract obligations, often combining automation with managed charging and demand response platforms.
Utilities use peak shaving portfolios to defer upgrades, meet capacity obligations, or comply with non-wires alternative requirements. Contracts may include penalties for non-performance and incentives for exceeding targets.
Investors evaluate peak shaving revenues when sizing storage systems or microgrids, ensuring contracts align with financing tenors and degradation budgets.
Technical Details
- •Defines peak windows (coincident or customer-specific)
- •Specifies measurement, verification, and notification protocols
- •Compensation tied to avoided demand charges or capacity costs
- •May include seasonal performance requirements
- •Integrates with DERMS or aggregator platforms
Why It Matters
Peak shaving contracts monetize flexibility that also supports electrification and resilience strategies. Tera catalogs contract terms, incentive levels, and participating assets so developers can target utilities with attractive programs.
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