Maximum demand is the highest average power a half-hourly metered site draws from the grid in any 30 minutes. It determines how much network capacity a business needs, and what it pays for it.
This guide explains what maximum demand is, how to find and calculate it, how it relates to Maximum Import Capacity (MIC), capacity charges and power factor, and how to reduce it.
What is maximum demand?
Maximum demand is the highest average power a business draws from the grid during any single 30-minute slot of a billing period.
It typically occurs during the busiest half hour period, when large machinery and everyday electrical equipment are running simultaneously, drawing large amounts of power.
It is expressed in kVA (kilovolt-amperes), a measure of the apparent power drawn from the grid.
Its main purpose is to calculate excess capacity charges at energy-intensive properties.
Maximum demand is only monitored for larger businesses with half-hourly meters (profile classes 00 and 05 to 08 on the MPAN), which agree their MIC with the local grid operator.
Smaller businesses and domestic properties don’t have a MIC, as their supply is physically limited by the main fuse instead, which stops them drawing more power than their connection is built for.
How is maximum demand measured?
A half-hourly meter continuously records the electricity used by a site, dividing each day into 48 separate half-hour periods.
For each period, the meter records the energy used in kWh, along with reactive energy in kVArh.
These readings are collected automatically, usually once a day, by a Half Hourly Data Collector (HHDC), an industry agent appointed by each business energy supplier.
The data collector checks the readings and fills any gaps with estimated values, then passes the data to the supplier.
Once a billing period is complete, the supplier reviews all the half-hour readings recorded to calculate the maximum demand.
How is maximum demand calculated?
Maximum demand in kVA is calculated from two readings a half-hourly meter takes every 30 minutes:
- Active energy (kWh): The share of energy converted into light, heat, motion or processing, such as powering computers, fans and lighting.
- Reactive energy (kVArh): The share of energy that equipment such as motors and compressors needs to create magnetic fields, which flows back and forth between the site and the grid without producing any useful output.
For each half hour, both readings are doubled to convert them into an average rate of power, then combined into a single figure for total demand:
Maximum demand (kVA) = 2 × √(kWh² + kVArh²)
- kWh: The active energy recorded in the half-hour period.
- kVArh: The reactive energy recorded in the same half-hour period.
- × 2: Converts the half-hour energy figures into an average hourly rate of power.
This calculation is carried out for every half hour in the billing period, and the highest result becomes the maximum demand used to calculate billing.
Where can businesses find their maximum demand?
A business’s maximum demand can be read from various places, depending on how much detail is needed.
- Half-hourly data: The most reliable source is the supplier’s half-hourly consumption data, which can be accessed through energy monitoring software or by requesting it from the supplier.
- The business electricity bill: Some suppliers show the maximum demand for the billing period, labelled “Maximum Demand”, “MD”, “Peak Demand” or “Actual Capacity”, especially if the site has gone over its MIC and an excess capacity charge has been added.
- The half-hourly meter: Some meters display the recorded peak directly, though this usually requires knowing which screen or register to read.
What is Maximum Import Capacity?
Maximum Import Capacity (MIC) is the maximum amount of power, in kVA, a business has contractually agreed to draw from the grid in any half-hour period, as set out in its connection agreement with the local Distribution Network Operator (DNO).
The DNO keeps this capacity reserved for the site at all times, whether or not it’s used. A larger reserve capacity typically results in higher DUoS charges, which are then passed on as higher business electricity prices within a business energy contract.
MIC is usually set slightly above a site’s estimated maximum demand, enough to allow headroom for growth or unexpected peaks without paying for significantly more capacity than needed.
The physical limit on how much power a site can draw is set by the site’s connection cables, transformer and fuses, which are sized to handle at least the agreed MIC.
On bills and contracts, MIC may appear as Available Supply Capacity (ASC) or Agreed Capacity.
What happens if maximum demand exceeds Maximum Import Capacity?
Exceeding MIC can have both financial and physical consequences for a business:
- Excess capacity charges: The business pays an additional charge for the demand above its MIC, covered in more detail below.
- A required capacity increase: Where breaches are repeated, the DNO may require the business to formally increase its MIC, which raises its ongoing capacity costs.
- Physical strain on the connection: Demand well above MIC can push the site’s electrical equipment beyond its limits, potentially blowing fuses or tripping protection and cutting power to the site.
If your maximum demand regularly comes close to or above your MIC, our capacity charge analysis service reviews your half-hourly data to check whether your MIC is set at the right level.
What should a business do if it exceeds its Maximum Import Capacity?
The first step is to review the half-hourly data to identify when the breach occurred and what caused it.
From there, the right response depends on whether the breach was a one-off or reflects a lasting change in demand:
- One-off or occasional peaks: Reduce the peak itself, using the steps covered in how a business can reduce maximum demand, further down this guide.
- A lasting increase in demand: If the site genuinely needs more capacity, applying to the DNO for a higher MIC avoids repeated excess charges, though it increases ongoing capacity costs and is dependent on approval from the DNO.
What is the maximum demand charge?
The maximum demand charge reflects the cost of the network capacity required by a business on a half-hourly meter. It is the combination of two separate electricity capacity charges, both expressed as pence per kVA per day in electricity bills:
- Capacity charge: A fixed charge based on the site’s Maximum Import Capacity, paid every billing period whether or not that capacity is fully used.
- Excess capacity charge: An additional charge applied when the site’s recorded maximum demand exceeds its Maximum Import Capacity, calculated on the amount of demand above the agreed limit and applied for the whole month in which the breach occurred.
How are business electricity capacity charges calculated?
Both charges are calculated daily, using a rate set by the site’s DNO, which varies by region and connection voltage and is passed through to the business by its supplier.
Capacity charge = MIC (kVA) × capacity rate (p/kVA/day) × days in billing period
Excess capacity charge = [maximum demand − MIC] (kVA) × excess capacity rate (p/kVA/day) × days in the month
How does power factor affect maximum demand?
Power factor is a measure of how efficiently a site uses the power it draws from the grid, expressed as the ratio between active power (kW) and total power (kVA).
A power factor of 1.0 means all the power drawn is doing useful work for the site. The further it falls below 1.0, the larger the share of reactive power, drawn mainly by motors, compressors and transformers.
Here is what the power factor typically looks like for different types of sites without correction equipment. These figures are indicative, since each site’s power factor depends on the equipment it runs.
A lower power factor increases maximum demand, even if the useful power a site uses stays the same.
This affects costs in several ways:
- A larger MIC requirement: Sites with a persistently low power factor need to reserve more capacity than their useful demand alone would suggest, increasing capacity charges.
- Higher risk of excess capacity charges: A higher kVA figure brings the site closer to, or above, its Maximum Import Capacity.
- Reactive power charges: Where reactive energy exceeds a set threshold, typically equivalent to a power factor below around 0.95, DNOs apply an additional charge per kVArh.
Power factor correction equipment, such as capacitor banks, reduces the reactive power a site draws from the grid, bringing kVA closer to kW and lowering these costs.
What causes high maximum demand?
High maximum demand is usually the result of heavy loads running together. Common causes include:
- Simultaneous start-up: Several motors, compressors or HVAC units switching on together, often at the start of a shift or working day.
- Overlapping activities: Energy-intensive processes such as production, cooking, heating and refrigeration peaking within the same half an hour.
- Seasonal heating or cooling: Electric heating in winter or air conditioning in summer adding a large extra load on top of normal operations.
- Low power factor: A high share of reactive power from motors, compressors or HVAC units raising the kVA figure without adding useful power.
- New equipment: Additional machinery or electric vehicle charging increasing peak demand without a review of capacity.
- Faults and inefficient equipment: Ageing plant or faulty controls drawing more power than necessary, or running when it isn’t needed.
How can a business reduce maximum demand?
Reducing maximum demand involves lowering the site’s single highest half-hour peak. The most effective ways to do this are:
- Identify when the peak occurs: Review half-hourly data to find which half hours set the maximum demand and what was running at the time. This can be done through an energy management system or through the supplier’s portal.
- Stagger equipment start-up: Start large machinery, compressors and HVAC units in sequence rather than all at once.
- Shift non-essential loads: Move activities such as vehicle charging, water heating, or certain production runs to quieter periods of the day.
- Improve power factor: Install power factor correction equipment to reduce reactive power and lower the kVA figure.
- Use automated load management: Set building management systems or demand controllers to reduce non-critical loads when demand approaches a set limit.
- Use on-site storage: Draw on batteries during the busiest periods to reduce the power taken from the grid.
- Maintain and upgrade equipment: Keep equipment well serviced and replace older, inefficient motors and HVAC units.
Once maximum demand is consistently lower, the business can consider reducing MIC with the DNO to cut capacity charges. Alongside lower capacity charges, businesses can also compare business electricity quotes to reduce the unit rate they pay for the energy itself.
What is the difference between recorded and estimated maximum demand?
Recorded maximum demand is calculated from a site’s actual half-hourly meter readings, while estimated maximum demand is used when actual readings are missing or do not exist yet.
Here is what each is used for:
Recorded maximum demand
This is the official maximum demand recorded by a half-hourly meter, and it is used for:
- Excess capacity charges: The highest half-hour in the billing period is compared against the site’s MIC, and any excess is charged at a penalty rate.
- Reviewing the MIC: Several months of recorded data show whether a business is paying for capacity it never uses, or regularly coming close to its limit.
Estimated maximum demand
Estimates are necessary for:
- Filling gaps in meter data: If data is missing for any reason or fault, the Half Hourly Data Collector (HHDC) fills the missing half-hours with estimated values and passes the data on for billing. These are usually replaced with actual readings once the data is recovered, and may involve the supplier issuing a corrected bill.
- Planning new or upgraded connections: A new site, or one adding significant load, has no meter history. An electrician or engineer estimates the maximum demand from the planned equipment, and this is used to agree the MIC and size the supply with the DNO.
Maximum demand FAQs
Our business energy experts answer commonly asked questions regarding the maximum demand that applies to company premises in Great Britain:
Can maximum demand occur outside normal business hours?
Yes, maximum demand can happen at any half-hour period in the billing period. Sites running overnight processes, refrigeration, electric heating or EV charging can record their peak outside working hours.
Does onsite solar reduce maximum demand?
It can, but only if the panels are generating and being drawn on during the half hour in which the site’s peak consumption occurs. Sites that peak in winter, in the early morning or in the evening, when solar output is low, may see little or no reduction, even if their overall consumption falls.
Can battery storage reduce recorded grid maximum demand?
Yes, because a battery can be set to discharge exactly when demand approaches its peak, reducing the power drawn from the grid during that half hour.
It then needs to recharge during quieter periods, which should be scheduled carefully so that recharging doesn’t create a new peak of its own.
Does a new EV charging installation require a review of Maximum Import Capacity?
Normally yes, because EV chargers can add a large load to a site very quickly, particularly where several are installed, or they charge at the same time.
The DNO generally needs to be notified of the installation, and where the additional load would push the site beyond its current MIC, an application to increase capacity is usually needed before the chargers go live.
Smart charging, which limits charging when site demand is high, can help avoid this.
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