Most business owners understand the first two lines on an electricity bill: a daily fee to stay connected, and a price for every kWh of energy you use. Then a third line appears, measured in kVA rather than kWh, and it’s usually bigger than expected. That’s your demand charge, which is based on the single busiest moment you had. For plenty of South Australian businesses, this line turns a manageable electricity bill into a budgeting problem.
What are demand charges?
A demand charge is a fee based on the highest rate at which you drew power from the electricity grid in a set window, not the total amount of electricity you consumed.
SA Power Networks, the electricity distributor for the state, must maintain an electricity network large enough for everyone’s worst-case scenario, and this is how that cost is shared.
SA Power Networks describes a demand tariff as a charge based on a customer’s maximum electricity demand, covering both local connection assets and the upstream network.
The unit is kVA, or kilovolt-amps, a measure of electrical power closely related to kW. When your compressor, ovens and air conditioning fire up together, that reading spikes, even if it only lasts half an hour.
What are demand charges on an electricity bill?
Most commercial energy bills carry three types of charges. Knowing which is which makes the rest easier.
Supply charges
A fixed daily amount for staying connected. This doesn’t move with your electricity usage.
Usage charges
A price per kWh of energy consumed. On a time-of-use plan, you pay different rates by time of day, with higher usage rates during peak periods.
Demand charges
A price per kVA per day applied to your peak reading for the billing period. This is where supply and usage charges stop telling the whole story, because you can cut energy consumption and see no movement here.
The key difference is that these additional charges come from a peak, not a total. A workshop running flat out for one hot February afternoon can pay more here than one humming along steadily all year.
How demand tariffs work in South Australia
The demand charges South Australian businesses face start with your energy distributor. SA Power Networks assigns network tariffs based on your annual electricity use, then your retailer decides how to pass those tariffs on, which is why the wording on your bill may not match the network’s. Network rates change each 1 July.
Medium business demand tariffs
SA Power Networks classifies medium business customers as those using 40,000 to 160,000 kWh of energy a year. A demand component applies to sites in that band drawing over 120 kVA, measured as the highest 30-minute interval in the last 12 months.
For 2026-27, the Medium Business Time of Use Demand network tariff carries a rate of $0.0861 per kVA per day, excluding GST. A site peaking at 130 kVA faces roughly $4,085 a year from that line alone, before the energy retailer adds its own margin.
Large business demand tariffs
Large business customers use more than 160,000 kWh a year. All of them sit on a demand tariff, and network charges are usually itemised separately on the electricity bill. More than 4,000 large business sites in South Australia are connected at low voltage.
There are two main options among the available tariffs: Annual Demand and Monthly Demand. Both price two separate measures, Anytime Demand and Peak Demand.
According to SA Power Networks’ 2026-27 tariff price list, a Large Low Voltage Business on Annual Demand pays $0.3408 per kVA per day for its peak, billed all year, plus $0.0630 per kVA per day for anytime demand. A 100 kVA peak works out at roughly $12,400 a year. Monthly Demand prices the peak at $1.2357 per kVA per day but bills it only from November to March.
When peak demand times fall in South Australia
Measurement runs across summer, November to March, and peak times depend on where you are in South Australia:
- CBD sites: highest 6-hour daily average, 11:00am to 5:00pm, workdays only
- Rest of South Australia: highest 4-hour daily average, 5:00pm to 9:00pm, every day
The two areas behave differently. The Adelaide CBD is dominated by commercial sites with limited rooftop solar, so its summer peak still sits inside business hours. Everywhere else, heavy solar uptake among households and residential customers has pushed peak times into the late afternoon and early evening.
Anytime Demand is measured separately, as your highest 30-minute interval across the previous 12 months on a July to June cycle.
Why one bad half hour costs you all year
Anytime Demand is the one that catches people out. A single spike on a single day sets a number that follows you for a year. A commissioning test, an unusually hot Friday, or three pieces of plant restarting together after an outage will do it. It’s real pressure on a site that has done nothing wrong except have one busy half hour.
It also explains why swapping to efficient appliances doesn’t always help. Efficient appliances lower your total energy demand across the day, which shows up in what you consume. If everything still switches on at once, your peak stays exactly where it was.
How commercial solar reduces peak demand and energy costs
Solar cuts this cost by reducing how much power you pull from the grid at the exact moment your peak is measured. Your equipment still runs, but the grid just sees a smaller number.
If your peak sits between 11:00am and 5:00pm, which covers CBD sites and many daytime operations elsewhere, solar generation overlaps it directly. Every kW your roof supplies is a kW the electricity network doesn’t have to.
Where solar energy helps most
Sites with heavy daytime energy use see the clearest result. Commercial kitchens, cool rooms, workshops running compressors and CNC machines, gyms, and shops pushing air conditioning through an Adelaide February all draw hardest when the sun is strongest. Spark Energy’s rundown of commercial solar without batteries goes deeper, and the same logic drives commercial solar demand charges down.
Where solar energy helps least
Outside the CBD, your window is 5:00pm to 9:00pm. In summer, solar output is falling away across it and gone by 9:00pm. Adding more panels won’t fix that. The fix is a different system design, which is what we look at when your site draws power before deciding what goes on the roof.
Solar will still cut the electricity you buy, but it does far less for this line.
When batteries become critical for peak shaving
Peak shaving means discharging stored energy across your measurement window so the grid never sees your full load. The battery covers the top of the curve while your solar energy and the grid handle the rest. For an evening-peaking site in South Australia, a battery can become critical where peak demand occurs after solar production falls and it’s often the only part of the system that reaches that window.
What peak shaving needs to work
Three things have to line up:
- Enough usable capacity to cover the window.
- Enough discharge power to shave the height of your peak, not just supply energy for a while.
- Control software that reacts to your load in real time.
A battery sized only for evening self-consumption will not reliably cut this cost. Sizing for peak shaving is a different calculation to sizing for self-consumption. It starts with your load profile rather than your roof space. That’s the design work we do before quoting.
A peak shaving system also needs watching. If it fails to discharge during one summer evening, that missed peak sets your Anytime Demand for the next 12 months, and you will not see it on a bill until the damage is done. Our ongoing monitoring and maintenance covers that.
The federal battery discount
The Cheaper Home Batteries Program offers Australian households, businesses and community organisations around 30% off eligible battery systems between 5 kWh and 100 kWh nominal capacity.
The discount tapers with size. The Clean Energy Regulator confirms the STC factor applies at 100% up to 14 kWh, 60% from 14 to 28 kWh, and 15% from 28 to 50 kWh, with nothing beyond 50 kWh. The taper means a larger battery does not attract a proportionally larger discount, which affects how you size the system. We handle the STC paperwork as a point-of-sale discount, and check whether any state grants apply to your site as well.
Can I opt out of a demand tariff?
SA Power Networks identifies medium business customers who meet the criteria, but says they can elect to opt into a time-of-use-only tariff instead. Requests go through your energy retailer, not the distributor.
Large business customers cannot opt out. You can ask to move between Annual and Monthly Demand, but the demand component stays.
Who is the cheapest energy supplier in SA?
There is no single answer, and anyone offering one is guessing. It depends on your electricity usage patterns, tariff assignment, trading hours, and how each retailer bundles network costs into its offer. We compare the market on your behalf and negotiate the right commercial energy contract. For most of our clients, this happens alongside a solar and battery installation rather than separately.
Why a cheaper rate may not move your demand charge
The kVA rates quoted earlier are network charges set by SA Power Networks. Your retailer bundles them into your offer and adds a margin, so switching retailers changes the margin and the packaging. The underlying network rate stays where it is.
Behind the meter, a different lever applies. Cutting your peak lowers the kVA figure those rates get multiplied by, and it can change which tariff you qualify for. SA Power Networks applies a demand component to medium business sites drawing over 120 kVA, and says those customers can elect to opt into a time-of-use-only tariff instead. A site that brings its peak under that threshold with solar, storage or load scheduling, then asks its retailer for a tariff change, has used both levers together. Neither one gets there alone.
Sequencing matters as well. Anytime Demand carries a 12-month memory, so a tariff review run before your lower peak is established is still priced against last summer’s spike. Handling both sides is the practical reason we do the brokering ourselves rather than leaving you to coordinate two suppliers who each only see half the problem.
Working out what demand tariffs cost your business
Start with your electricity bill. Find the kVA figure and the rate beside it, multiply across the billing period, and you have your answer in dollars.
Then request your interval data, which arrives as a spreadsheet of half-hourly readings. We can pull yours and map where your peaks actually fall before anyone talks about system size.
Where demand tariffs leave your business
We understand that demand charges are one of the most confusing parts of your energy bill. We pride ourselves on eliminating that complexity and getting down to the crux of what truly matters: simplifying solar and powering your future.
We start with your interval data and your current tariff, because those two together determine what’s worth doing. From there, we design a system around when your site actually draws power, handle the rebate paperwork and network approvals, and install it. Then we monitor and maintain it, because a peak shaving system that quietly stops shaving costs you a full year of Anytime Demand before it shows up on a bill.
If you want to know where your demand charges are coming from and what would move them, call our Spark Energy team on 1300 785 525 or request a free quote. We’ll show you the numbers either way.
