Course: GFM 102 Technical Aspects of Energy, Resources & Conservation

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Understanding Energy Consumption Versus Energy Demand

Understanding Demand and Consumption

Demand = KW

Consumption = KWH

The difference between demand (KW) and consumption (KWH) is vital to your choices in reducing your energy costs. A simple way to see the difference between demand and consumption is by considering two examples.  LIGHTING EXAMPLE: One 100-watt light bulb burning for 10 hours consumes 1,000 watt-hours or 1 kWh. The entire time it is on, it requires or "demands" 100 watts or 0.1 kW from the utility. That means the utility must have that 0.1 kW ready whenever the customer turns the lamp on.

Similarly, ten 100-watt light bulbs burning for 1 hour consume 1,000 watt-hours or 1 kWh. Note that in both examples, the consumption is 1 kWh, however, look how differently the second situation impacts the utility from a demand perspective. The serving utility must now be prepared to provide ten times as much 'capacity'
in response to the "demand" of the 10 light bulbs operating all at once.

If both of these customers are billed for their consumption only, both will get the same bill for 1 kWh of energy. And that is the way most residential customers are billed. But the requirement for the utility to meet this energy requirement is very different. In the second case, the utility has to have 10 times more generating 'capacity' to
provide the second customer's brief high demand for power compared to the first case.

Commercial and industrial customers are often billed for their hourly consumption patterns and their peak demand for energy. These customers often have special meters that measure both, unlike residential meters that just record total consumption in a time period, usually one month.

Click here to access the webpage on FAQ about Electricity from the U.S. Energy Information Administration.
Click here to access the webpage on Time-Varying Pricing from Pacific Gas and Electric Company.