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Peak Shaving Battery ROI Calculator
Commercial batteries cut demand charges by discharging during peak hours.
Payback years
2.9
Net cost after ITC
$154,000
Annual savings
$54,000
How the math works
Net cost = system − ITC. Payback = net / annual savings.
$220k × (1 − 30%) = $154k net. $4,500 × 12 = $54k/yr. 2.9 yr payback.
How to Use
- Enter battery capacity kWh.
- Enter battery system cost.
- Enter avoided demand charges monthly.
- Enter ITC tax credit %.
- Enter life years.
- Read payback.
Frequently Asked Questions
Demand charges?
Commercial utility bills often include: (1) Energy charge $/kWh, (2) Demand charge $/kW (based on peak 15-min demand in billing period). Demand charges: $5-40/kW-month. 500 kW peak building: $2,500-20,000/month demand charges alone. 30-50% of total bill often. Batteries discharge to cut peak demand → slash demand charge.
Battery sizing?
Size for peak duration. Most commercial peaks: 2-5 hour duration afternoons. Battery kWh = peak kW reduction × hours needed. 200 kW peak reduction × 3 hours = 600 kWh battery. Cost: $300-600/kWh installed for LFP chemistry. 600 kWh battery: $180-360k. Payback 4-10 years typical with demand savings + ITC + incentives.
ITC eligibility?
IRA 2022: standalone storage eligible for 30% ITC (first time). Previously required solar pairing. Bonus ITC: domestic content +10%, energy community +10%, low-income +10-20%. Up to 70% total ITC possible. Transferable: sell to other taxpayer (80-95¢ on dollar). Direct pay for non-profits. ITC applied to total project cost (battery + inverter + install + engineering).
Performance guarantees?
Battery warranties: 70-80% capacity retention at year 10. Software-managed: real-time dispatch to avoid exceeding 15-min peak. Typical: 80-95% peak demand reduction on well-sized system. O&M: $2-6/kWh/year. Remote monitoring + dispatch: $1-3/kWh/year vendor service. 15-20 year battery life with LFP chemistry.
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