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Coincident peak management | The Outlet — Pilot Energy

Written by Pilot Energy | May 26, 2026 4:22:03 PM

On a napkin

MW CP hour Curtailment = lower tag Without CP management With CP management

The short version

In capacity market regions — PJM, ISO-NE, NYISO — a significant portion of your electricity bill is a capacity charge based on your coincident peak demand: how much power you were drawing during the grid's highest-load hour of the year. Reduce that demand during those specific hours, and your capacity tag falls, lowering your capacity cost allocation for the following 12 months. Coincident peak management is systematically predicting and responding to those hours — one of the highest-ROI activities available to large C&I energy buyers.

The math is compelling. In PJM, capacity costs run $50,000–$120,000 per MW-year depending on zone. A 1 MW reduction in your CP tag saves that amount annually. For a 5 MW facility in a high-cost zone, an effective CP program can save $250K–$600K per year — often achieved by curtailing load for just 1–4 hours on a handful of summer days.

How CP tags are determined by ISO

In PJM, the capacity tag is called the Peak Load Contribution (PLC). It's based on your metered demand during the single highest-load hour of the PJM system each year — typically a hot weekday afternoon in July or August. Your PLC from the current summer determines your capacity cost obligation for the following June–May delivery year.

In ISO-NE, the tag is based on your average demand during the top 5 peak hours of the summer (the CP5). In NYISO, each load zone has its own peak hour methodology. The critical insight: all these methodologies are based on a small number of specific hours — predicting them accurately is the core challenge and the core opportunity.

Building a CP alerting and response program

An effective CP management program has three components. Prediction: most CP events occur on hot, humid, sunny weekday afternoons when air conditioning load is highest. Third-party alerting services combine temperature and humidity forecasts, ISO demand alerts, historical demand patterns, and real-time grid data to identify high-probability CP days with 24–48 hours lead time — giving facility teams time to prepare.

Notification: facility operators and building management teams need clear, timely alerts. The best programs include automated notifications at 24 hours, 4 hours, and 1 hour before the expected peak window, with clear curtailment instructions and pre-defined response checklists. Response: the curtailment must happen before the peak hour arrives. Pre-cooling buildings to 68°F before 2pm, shifting production schedules, ramping down energy-intensive equipment, and dispatching behind-the-meter storage all must be executed before the grid peak — not during it.

What facilities can implement CP management

Almost any facility with thermal mass or interruptible load can participate. Commercial buildings pre-cool before the event and coast through the peak hour at reduced HVAC. Industrial facilities schedule maintenance windows, reduce production rates, or shift load to off-peak shifts. Cold storage and refrigeration can pre-chill. Data centers with backup generation can island from the grid during the peak. Behind-the-meter battery storage provides the most reliable response — it doesn't depend on real-time operator decisions and can combine with solar output to nearly zero out net metered demand during the CP event.

Common questions

What is coincident peak demand?
Coincident peak demand is your facility's electricity consumption during the grid's peak demand hour(s) — the highest-load period of the year for your ISO. In capacity market regions, your share of capacity costs is allocated based on your demand during these specific hours, not your average or maximum demand. This creates a powerful incentive to curtail load during those precise hours.
How is the capacity tag calculated in PJM?
In PJM, your capacity tag (Peak Load Contribution or PLC) is based on your metered demand during the single highest-load hour of the PJM system each year — typically a hot weekday afternoon in July or August. Your PLC from the current summer determines your capacity cost obligation for the following June–May delivery year. A lower PLC means lower capacity charges for 12 months.
How much can coincident peak management save?
Savings depend on your ISO, zone, and load size. In PJM, capacity costs run $50,000–$120,000 per MW-year depending on zone. A 1 MW reduction in your CP tag saves that amount annually for the following year. For a 5 MW facility in a high-cost zone, effective CP management can save $250K–$600K per year — often with minimal operational disruption for just a few hours per summer.
How do I predict coincident peak events?
CP events typically occur on the hottest, most humid weekday afternoons in summer. Most ISOs publish demand alerts and high-load hour warnings. Third-party CP alerting services combine temperature forecasts, humidity data, historical demand patterns, and ISO dispatch signals to identify high-probability CP days with 24–48 hours lead time. The PJM 5-minute dispatch graph is widely monitored during summer peak windows.
Can behind-the-meter storage help with CP management?
Yes. Behind-the-meter battery storage can discharge during the CP hour, reducing net metered demand and lowering your capacity tag. Combined with on-site solar and pre-cooled thermal mass, storage can eliminate most of a facility's net demand during the CP event. Storage provides more reliable CP management than behavioral curtailment because it doesn't depend on real-time operator decisions and can respond consistently every year.

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