Maximum demand (MD) — what it is and how to reduce demand charges

Tariffs & billing · 7 min read · Updated 2026-04-21
TL;DR

MD is the highest average load over a fixed window (often 15 or 30 minutes). Even one peak event can set the month’s demand charge. Monitoring + staggering loads reduces MD without reducing comfort.

What is MD (maximum demand)?

Maximum Demand is the highest measured demand over a fixed interval during the billing period. Utilities charge a ₹/kW or ₹/kVA component based on that peak.

How to reduce maximum demand

  • —Stagger HVAC compressor starts and large motor starts.
  • —Use set-point resets and scheduling to avoid simultaneous peaks.
  • —Move flexible loads to off-peak hours (laundry, pumps).
  • —Track peaks in real time with an IoT main incomer meter.

MD vs kVAh vs PF

MD (kW/kVA) is a peak power metric; kVAh is energy. PF affects kVA and kVAh, so PF correction can reduce both demand and energy charges where tariffs use kVA metrics.

Frequently asked questions

Is MD charged for all consumers?

MD/demand charges are common for commercial and industrial connections. Residential tariffs are usually energy-only (kWh) with minimal fixed charges.

Does one short peak affect the whole month?

Yes—if that peak is the highest interval average in the month, it sets MD for billing.

Can a smart meter show MD?

Yes. Three-phase meters typically expose current demand and recorded MD. IoT dashboards make peak events visible and actionable.

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