Demand charge

A demand charge is a utility fee billed on the single highest 15- or 30-minute peak of power draw (kW) during a billing period, separate from the per-kWh energy charge for total consumption. Because data centers run at high, relatively flat load factors, demand charges reward steady draw and penalize spikes from generator tests, chiller startup sequences or UPS-to-utility transfers that briefly push demand above the facility's normal baseline. Commercial and industrial tariffs in markets like the US and Southeast Asia often set demand charges at $10-20 per kW per month, meaning a single 30-minute spike across a 20 MW facility can add hundreds of thousands of dollars to an annual power bill. Operators manage exposure through staggered equipment start-up sequencing, on-site battery storage that shaves peaks, and negotiated interruptible or high-load-factor tariffs that trade guaranteed steady draw for a lower per-kW rate.