Billing
Load Factor
Definition
A ratio expressing how evenly a facility uses energy over a billing period, calculated as: (Total kWh consumed) ÷ (Peak kW × Hours in period). A load factor of 100% means consistent energy use; a low load factor means high peaks relative to average consumption.
Why It Matters for Your Business
Load factor directly affects how much you pay in demand charges per kWh consumed. A facility with a low load factor pays disproportionately high demand charges. Improving load factor — by smoothing out peaks — reduces demand charges without changing total energy consumption.
Frequently Asked Questions
What is a good commercial load factor?
Varies by industry. 24/7 operations like data centers or hospitals often achieve 70–90%. Standard office buildings typically run 40–60%. Below 40% usually indicates significant demand charge optimization opportunity.
How do I calculate my load factor?
Divide your total monthly kWh by (peak kW demand × number of hours in the month). Example: 100,000 kWh ÷ (500 kW × 720 hours) = 27.8% load factor.