The peak demand of an installation or a system is simply the highest demand that has occurred over a specified time period (Gönen 2008). Peak demand is typically characterized as annual, daily or seasonal and has the unit of power. Peak demand, peak load or on-peak are terms used in energy demand management describing a period in which electrical power is expected to be provided for a sustained period at a significantly higher than average supply level. Peak demand fluctuations may occur on daily, monthly, seasonal and yearly cycles. For an electric utility company, the actual point of peak demand is a single half-hour or hourly period which represents the highest point of customer consumption of electricity. At this time there is a combination of office, domestic demand and at some times of the year, the fall of darkness.
Some utilities will charge customers based on their individual peak demand. The highest demand during each month or even a single 15 to 30 minute period of highest use in the previous year may be used to calculate charges.
The maximum demand dictates the size of generators, transmission lines, transformers and circuit breakers for utilities even if that amount lasts just one hour per year. Natural gas fueled power generators must all have adequately sized pipelines. Power generation which is able to be rapidly ramped up for peak demand often uses more expensive fuels, is less efficient and has higher marginal carbon emissions.
Peak demand may exceed the maximum supply levels that the electrical power industry can generate, resulting in power outages and load shedding. This often occurs during heat waves when use of air conditioners and powered fans raises the rate of energy consumption significantly. During a shortage authorities may request the public to curtail their energy use and shift it to a non-peak period.
Power stations providing power to electrical grids for peak demand are called peaking power plants or 'peakers'. Natural gas fueled power stations can be fired up rapidly and are therefore often utilized at peak demand times. Pumped storage type dams such as Carters Dam in the U.S. state of Georgia help to meet peak demand as well.
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