The Most Expensive Kilowatt-Hour in Your Building Happens at the Wrong Time

Why demand spikes and poor mechanical sequencing are quietly increasing electricity costs for building owners

For many large buildings, electricity costs are not driven solely by how much energy is consumed. Increasingly, the most expensive electricity is determined by when it is used.

In Ontario’s evolving electricity market, peak demand and system timing play a significant role in determining utility costs. Commercial and institutional customers often pay charges linked to their highest electricity demand during peak grid periods. These demand-based costs can materially increase operating expenses even if total energy consumption remains relatively unchanged [1].

For building owners and operators, this means that operational strategy can directly influence electricity costs.

The hidden cost of peak demand

Electricity demand spikes often occur during morning startup, when multiple systems ramp up simultaneously after overnight setbacks.

Chillers start.

Air handling units accelerate.

Pumps increase flow.

Ventilation systems shift to daytime operation.

If these systems start together, they can create a short but significant demand spike that locks in higher demand charges for the entire billing cycle.

In Ontario’s electricity market, demand costs can represent a meaningful share of total electricity expenses for large commercial buildings [2]. For office towers, hospitals, and institutional facilities, poorly sequenced equipment startup can translate into substantial annual costs.

“In many buildings, electricity demand spikes are not caused by tenant activity. They are caused by how mechanical systems start and stage in the morning,” said Josh Lewis, Chief Technical Engineer, NERVA Energy. “When equipment sequencing is optimized, those spikes can often be reduced without affecting comfort.”

Why timing matters more than ever

Ontario’s electricity market has become increasingly responsive to supply and demand conditions.

Electricity prices fluctuate hourly based on grid conditions, and the system operator monitors periods when demand approaches available generation capacity [3]. During these periods, electricity becomes significantly more expensive.

Buildings that draw large amounts of power during these windows are exposed to higher operating costs.

Demand spikes are particularly common in buildings where HVAC systems follow fixed schedules rather than responding to real operating conditions.

Mechanical systems are often the root cause

In many commercial buildings, mechanical systems were programmed years ago and have not been recalibrated as building usage patterns evolved.

Common contributors to unnecessary demand spikes include:

• Simultaneous startup of large equipment

• Static pressure setpoints that remain fixed regardless of demand

• Chilled water systems operating at full flow during ramp-up

• Ventilation systems running at constant airflow

• Aggressive start-stop schedules designed for full occupancy

These inefficiencies are rarely visible without detailed analysis of building mechanical performance data and interval electricity consumption.

However, they can have a measurable financial impact.

Demand management without capital investment

Unlike major equipment upgrades, demand management strategies often rely on operational adjustments rather than capital investment.

Examples include:

• Staggered equipment startup

• Adaptive start-stop scheduling

• Static pressure reset strategies

• Chilled water temperature reset

• Intelligent sequencing of central plant equipment

These adjustments smooth the building’s demand profile and reduce peak electricity draw.

“Demand management is one of the fastest ways to improve energy performance without replacing equipment,” said Trevor Shaw, Chief Operations Engineer, NERVA Energy. “By aligning mechanical operation with actual building needs, owners can reduce electricity costs while maintaining occupant comfort.”

A portfolio strategy, not a facilities detail

For portfolio owners, electricity demand management is no longer just a technical issue. It is a financial one.

Even modest reductions in peak demand can translate into meaningful savings across large portfolios, particularly in markets like Ontario where electricity costs are sensitive to grid demand.

As electricity pricing structures evolve and energy volatility increases, building operators who actively manage demand will be better positioned to control operating expenses.

The lesson for owners is straightforward.

The most expensive kilowatt-hour in a building is often the one used at the wrong time.

Managing when energy is consumed may become just as important as managing how much energy is used.

About NERVA Energy

NERVA Energy is a distinguished multidisciplinary engineering firm, renowned for its cutting-edge energy performance solutions. With an elite team composed of seasoned energy engineers, M&E engineers, and seasoned in-house mechanical technicians, NERVA is steadfast in its commitment to delivering turn-key solutions. These solutions not only amplify building energy efficiency but are also backed by a steadfast financial performance guarantee.

To learn more about the company and our services, visit:

 www.nervaenergy.com