It’s spring. The days are getting longer. Some greenhouse growers turn off their supplemental lighting at this time of year. When does it make sense to keep the lights on?

The answer is a bit complicated. Even if the lights are only on for an hour in an entire month, supplemental lighting can incur electricity costs called demand charges. A grower should be able to calculate these costs when deciding whether to keep the lights on.

What are demand charges?

Power utilities have to deliver electricity, even when demand spikes up. Demand charges compensate utilities for providing this capacity. Electricity consumers pay demand charges, based on the maximum amount of power they use in a billing period, even if that maximum only occurs for a short period of time. This is known as the billing period peak. It can be found on an electricity bill measured in kW.

Demand charges are relevant for a greenhouse grower who decides to use lights sporadically during the summer.

How much do demand charges cost?

As an example, consider a grower who decides to use supplemental lights one day – or maybe even a week in the summer months – when typically, they would not be lighting. It will be important for them to know whether the increased production from the extra hours of lighting will be worth incurring the extra demand charges.

To help growers evaluate the effect of turning on the lights, 360 Energy assessed four scenarios:

A typical rate of $8.00/kW was used to give an idea of how high demand charges from supplemental lighting can raise a grower’s electricity bill:

Scenario #1 illustrates the grower’s base load cost.

Scenario #2, an hour of trial lighting, illustrates how demand charges triple a grower’s utility costs compared to the base load cost.

Scenario #3, an hour of lighting a 10-acre greenhouse, illustrates an increase of $40,000 in utility costs compared to the base load cost.

Scenario #4, an hour of lighting a 20-acre greenhouse, illustrates an increase of $80,000 in utility costs compared to the base load cost.

Turning on the lights may be worth it. The answer depends on the market value of the crop, or on the increased revenue from extra production thanks to additional hours of supplemental lighting.

A grower must double check the demand rate and understand the costs. It’s the only way to ensure that turning on the lights is a cost-effective decision.

Quick Demand Charge Calculation

Are you curious as to how much more would you pay in demand charges if you decided to
use lighting for even just an hour in May or June? Here is a quick calculation to use:

‍Max. Hourly Electricity Usage when Lighting ÷
Max. Hourly Electricity Usage without Lighting

Now, multiply this ratio by the demand charge. It will calculate how much more demand
charges will cost when deciding to light even one hour in a new billing period.

How Does 360 Energy Help?

At 360 Energy, we monitor and analyze energy data so you don’t have to! We predict and calculate your future usage based on your data and the changes you would like to make at your greenhouse. You can focus on the growing, we’ll take care of your energy!