*4.4. Peak Clipping*

The release of energy at a certain volume factor during peak times can be employed to lessen peaking volume thus saving costs. The general formulae for value realization over the life of the asset to the generator are expressed as follows in Equation (2).

$$Value = Demand\ Reduction \times Differential\ \text{Cost of Peak}\ \text{Generation}\tag{2}$$

The general formulae for value realization over the life of the asset to the end consumer are expressed as follows in Equation (3).

$$\text{Value} = \text{Demand Reduction} \times \text{Demand Charge} \left( \text{R/kWh} \right) \tag{3}$$

The energy arbitrage and peak shaving are demonstrated in Figure 12.

**Figure 12.** Peak shaving application for BESS.
