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Get a Free QuoteCalculate your ROI from peak shaving, ConnectedSolutions revenue ($200-$400/kW/year), time-of-use arbitrage, and solar+battery optimization. MA demand charges represent 30-50% of commercial bills.
Demand Charges
$8-$25/kW
MA commercial rates
ConnectedSolutions
$200-$400
Per kW per year
Battery Cost
$500-$800
Per kWh installed
Typical Payback
2-4 Years
With ITC + revenue
A Massachusetts commercial facility with 200 kW peak demand and a 100 kWh / 50 kW battery system ($50,000-$80,000 installed) can generate $23,000+/year in combined value: $9,558/year in demand charge reduction (shaving 50 kW at $15.93/kW) plus $10,000-$13,500/year from ConnectedSolutions payments. With the 30% federal ITC reducing the effective battery cost to $35,000-$56,000, the simple payback is under 3 years. Adding solar ($0.045/kWh SMART storage adder) and time-of-use arbitrage can push total annual value above $30,000. Over a 15-year battery life, total value exceeds $300,000.
Most business owners understand their electricity rate in $/kWh (energy charges). Fewer understand demand charges, which are billed based on your peak power draw measured in kilowatts (kW) — not kilowatt-hours (kWh). The utility measures your power consumption in 15-minute intervals throughout the billing period and charges you based on the single highest interval.
This means a single 15-minute spike — like simultaneously starting HVAC compressors, production equipment, and kitchen appliances on a hot summer morning — can set your demand charge for the entire month. In Massachusetts, commercial demand charges range from $8-$25 per kW, and they typically represent 30-50% of the total commercial electric bill.
Consider a typical example: a 200 kW peak demand facility on Eversource's B-2 rate at $15.93/kW pays $3,186/month ($38,232/year) in demand charges alone — before a single kWh of energy is consumed. If that facility could reduce its peak demand by just 50 kW (from 200 to 150 kW), it would save $9,558/year. This is exactly what battery storage accomplishes.
Demand charges are based on the single highest 15-minute interval in the billing period. Even if your facility runs at 100 kW 99.9% of the time, one 15-minute spike to 200 kW means you pay the demand charge on the full 200 kW for the entire month. This is why demand management — whether through load scheduling, battery storage, or both — has such outsized financial impact. Battery storage automatically prevents these costly spikes.
Demand charge rates vary by utility and rate class. Larger facilities on primary voltage service typically face higher per-kW charges. Understanding your specific rate is the first step in sizing a battery system.
| Rate Class | Demand Rate | Territory | % of Bill | Annual at 200 kW |
|---|---|---|---|---|
| National Grid (G-2) | $13.42/kW | Central & Western MA | 35-45% | $32,208 |
| National Grid (G-3) | $18.76/kW | Large commercial >200 kW | 40-50% | $45,024 |
| Eversource (B-1) | $11.89/kW | Eastern MA general service | 30-40% | $28,536 |
| Eversource (B-2) | $15.93/kW | Eastern MA large commercial | 35-45% | $38,232 |
| Eversource (B-3) | $22.47/kW | Primary service | 40-50% | $53,928 |
| Unitil (G-1) | $9.84/kW | Fitchburg area | 25-35% | $23,616 |
Rates shown are approximate and subject to utility tariff changes. Check your specific utility bill for your actual demand charge rate. Some rates include both distribution and transmission demand components.
For a 200 kW peak demand facility on Eversource B-3 rate, demand charges alone total $53,928/year. Shaving just 25% of peak demand (50 kW) saves $13,482/year — enough to pay for a 100 kWh battery system in under 5 years, before ConnectedSolutions revenue.
Peak shaving is the primary revenue driver for commercial battery storage. The battery continuously monitors your facility's power draw and automatically discharges when demand approaches a set threshold, preventing costly spikes from reaching the utility meter. Here is a worked example:
Current Peak Demand
200 kW
Demand Rate
$15.93/kW
Battery System
100 kWh / 50 kW
Peak Reduction
50 kW
Modern commercial battery management systems (BMS) use real-time power monitoring and predictive algorithms. The BMS sets a demand threshold (e.g., 150 kW) and monitors your facility meter every second. When demand approaches the threshold, the battery begins discharging at exactly the rate needed to keep the meter below the setpoint. This happens automatically — no manual intervention required. The system learns your facility's load patterns over time to optimize charge/discharge cycles and preserve battery life.
ConnectedSolutions is the Massachusetts utility-run demand response program that pays commercial battery owners to dispatch their batteries during grid peak events. It is the single largest revenue stream for commercial batteries in Massachusetts and is unique to the state's incentive landscape. National Grid, Eversource, and Cape Light Compact all participate.
Events
60-100 events/year (summer focus)
Duration
2-3 hours per event
Season
June - September primarily
Utility dispatches battery during system peak events. Most common program for commercial batteries.
Events
40-60 events/year
Duration
1-3 hours per event
Season
Year-round (summer + winter peaks)
Higher payments for batteries available for targeted peak events. Requires higher availability commitment.
| Battery Size | Power (kW) | Daily Dispatch | Targeted Dispatch |
|---|---|---|---|
| 50 kWh / 25 kW | 25 kW | $5,925/yr | $8,425/yr |
| 100 kWh / 50 kW | 50 kW | $11,850/yr | $16,850/yr |
| 250 kWh / 125 kW | 125 kW | $29,625/yr | $42,125/yr |
| 500 kWh / 250 kW | 250 kW | $59,250/yr | $84,250/yr |
ConnectedSolutions payments are in addition to demand charge savings, not instead of them. The battery can serve both purposes because grid peak events often coincide with your facility peaks (hot summer afternoons). For more on ConnectedSolutions, see our complete ConnectedSolutions guide.
Proper battery sizing depends on your facility's load profile, demand charge rate, and revenue goals. Oversizing wastes capital; undersizing leaves savings on the table. Here are four common commercial battery configurations with total annual ROI including both demand charge savings and ConnectedSolutions revenue.
Installed cost: $25,000-$40,000
Small businesses with 50-100 kW demand, moderate demand charges
Installed cost: $50,000-$80,000
Mid-size commercial with 100-200 kW demand, significant demand charges
Installed cost: $125,000-$200,000
Large commercial/industrial with 200-500 kW demand
Installed cost: $250,000-$400,000
Industrial facilities, campuses, large retail with 500+ kW demand
Commercial lithium iron phosphate (LFP) batteries have a round-trip efficiency of 85-90%, meaning 10-15% of energy is lost in each charge/discharge cycle. Annual capacity degradation is approximately 2-3%, so a 100 kWh battery retains ~75 kWh usable capacity at year 10. These factors are included in the ROI calculations above. LFP chemistry is preferred for commercial applications due to its superior cycle life (6,000+ cycles), safety profile, and stable degradation curve compared to NMC chemistry.
While standalone batteries deliver strong ROI from demand charge savings and ConnectedSolutions alone, pairing a battery with commercial solar unlocks additional revenue streams unique to Massachusetts.
+$0.045/kWh
~$10,800/yr (200 kW example)
SMART 3.0 pays an additional $0.045/kWh for solar systems paired with battery storage. On a 200 kW solar system, this is $10,800/year ($216,000 over 20 years).
Varies
~$5,000/yr (200 kW example)
Battery stores excess midday solar for evening use, maximizing self-consumption and reducing grid imports during expensive peak hours.
$0.05-$0.10/kWh spread
~$8,000/yr (200 kW example)
Charge battery during off-peak hours ($0.08-$0.12/kWh), discharge during on-peak ($0.18-$0.25/kWh). The TOU spread in MA is significant enough to generate meaningful savings.
Risk reduction
~N/A/yr (200 kW example)
Solar+battery provides backup power during grid outages. For businesses with critical loads (food storage, data centers, healthcare), outage avoidance value can exceed direct financial returns.
A combined 200 kW solar + 100 kWh battery system generates significantly more total annual value than either component alone. The solar system produces electricity savings and SMART revenue; the battery generates demand charge savings, ConnectedSolutions payments, and the SMART storage adder; and the two working together enable self-consumption optimization and TOU arbitrage. For a complete project-level analysis, see our commercial solar IRR calculator.
The federal ITC applies to both the solar system and the battery storage, whether installed simultaneously or added separately. The 30% ITC on a combined $400,000 solar+battery system returns $120,000 in Year 1 tax credits alone. See our battery storage guide for detailed technology comparisons and sizing methodology.
Complete guide: ITC stacking, SMART 3.0, financing, and ROI for MA businesses.
Complete ConnectedSolutions program guide with enrollment, payments, and dispatch details.
Battery technology comparison, sizing guide, and top products for MA installations.
Full IRR/NPV calculator combining ITC, MACRS, SMART, and electricity savings.
Demand charges are billed based on your peak power draw (measured in kW) during a billing period — typically the highest 15-minute average in the month. In Massachusetts, commercial demand charges range from $8-$25/kW and can represent 30-50% of your total electric bill. They are high because MA has constrained grid infrastructure, high peak summer loads from cooling, and expensive transmission costs. A single 15-minute spike in usage — like starting HVAC on a hot morning — can cost $200-$500 extra on your monthly bill.
We will analyze your utility bills to identify demand charge savings opportunities and model the optimal battery size for your facility — including ConnectedSolutions revenue.