Contract Power and Demand Charge Optimization for Industrial Facilities

What contract power determines

Contract power (sözleşme gücü) is the maximum active power level a facility is entitled to draw from the distribution network at any 15-minute interval. It determines the capacity component of the facility's tariff: a higher contracted level means a higher monthly capacity charge regardless of whether that capacity is used. It also determines the penalty threshold: exceeding contract power in any 15-minute period triggers an excess demand penalty, typically priced as a multiple of the active energy rate for the excess kW drawn.

Overcontracted vs undercontracted

An overcontracted facility pays monthly capacity charges for headroom it never uses. A facility that signed a contract at 1,000 kW during initial connection but now operates peak loads of 650 kW is paying for 350 kW of unused capacity every month. An undercontracted facility risks demand penalty events. A facility whose production has grown since the contract was set may regularly draw 1,200 kW on a 1,000 kW contract, triggering a penalty on every peak interval. Both problems are common in facilities where the electricity contract has not been reviewed since initial commissioning.

Demand profile analysis method

The analysis requires 15-minute active power demand data for a representative 12-month period — available from the meter data management system or from the distribution operator. The analysis identifies the actual peak demand level, the frequency distribution of demand intervals, seasonal patterns, production-related peaks, and the gap between the contracted level and the realistic maximum demand. It then models the financial outcome of different contract power levels to identify the optimal point that minimizes total capacity and penalty cost.

Re-contracting process

Re-contracting a distribution connection requires a formal application to the distribution operator. The operator reviews the request, inspects the connection if capacity is being reduced, and issues a new connection agreement. The process typically takes 2-6 weeks. For facilities on a high-voltage connection, re-contracting may also affect transformer sizing requirements and protection settings. The timing of a contract revision should account for seasonal demand peaks to avoid signing a lower contract level just before a high-demand production period.

Combined effect on total bill

For most industrial facilities, reactive penalty and demand charge optimization together can reduce the total monthly electricity bill by 8-20% without any production process change and without significant capital investment. The reactive penalty is recovered through compensation correction. The demand charge is recovered through contract revision. The energy tariff component — the largest single item — can be further addressed through open market supply eligibility review and time-of-use load shifting where process flexibility permits.

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