When a Battery Becomes a Razor: Using Lithium-ion Batteries in Peak Shaving Energy Strategies
Since energy consumption makes up a significant portion of a warehouse facility’s operational costs, material handling companies are always searching for ways to reduce energy usage—because using less energy means saving big money. One way to offset high energy costs is through a strategy called peak shaving. But what is peak shaving, and how can advanced energy technology like lithium-ion batteries (LiBs) help companies make the most of it?
What is Peak Shaving?
Peak shaving is the process of reducing energy consumption during periods of high demand. Energy grids experience peak demand during the day—typically between 6 AM and 9 PM—when households, schools, and businesses are most active. Peak shaving offers two major benefits: lowering energy costs and protecting energy grid stability.
The two most common techniques businesses and utilities use for peak shaving are:
- Energy storage systems
- Demand response programs
Lithium-ion batteries can play a significant role in both strategies—acting as the sharp edge of the energy-saving razor.
Energy Storage Systems
Storing energy for future use is a valuable peak shaving strategy, and LiBs play a major role in these systems. Energy storage involves using a group of batteries in an onsite system to store energy—often from renewable sources like solar—for use during peak periods. This allows warehouses to draw from their stored energy instead of the utility grid when demand (and rates) are highest.
While the upfront costs for energy storage solutions can be high, the return on investment (ROI) is significant. Once ROI is reached, businesses see a substantial drop in energy bills. Additionally, some utilities and municipalities offer financial incentives for companies that implement onsite energy storage or “battery backup” systems. Exploring these incentives can help reduce initial costs and accelerate ROI.
Demand Response Programs
To protect grid stability, utility companies offer demand response programs that adjust consumer energy usage in real time during peak demand periods. For example, on extremely hot days when air conditioners are running nonstop, utilities may request participating businesses to reduce their energy usage.
If demand isn’t reduced, utilities may enact grid constraints—lowering voltage output. In exchange for participation, businesses receive financial incentives, such as discounts on monthly energy bills. These programs are most effective for companies with operational flexibility and are often paired with energy storage systems.
Li-ion batteries are essential during demand response events. Their ability to power warehouse operations independently of the grid ensures business continuity even when voltage is reduced. Additionally, the savings from demand response participation can be applied toward the ROI of the energy storage system.
Sharpening the Strategy: Li-ion Batteries in High-Intensity Operations
In high-throughput warehouse environments, lithium-ion batteries are not just a power source—they’re a strategic asset. Unlike traditional assumptions that some forklifts sit idle, most modern operations aim to maximize equipment utilization. The real advantage of LiBs lies in their ability to support continuous, high-intensity operations with minimal downtime.
Thanks to their fast-charging capabilities, operators can top off batteries during short breaks, maintaining a high state of charge throughout the day without interrupting workflows. This operational flexibility makes LiBs ideal for peak shaving. Instead of rotating idle vehicles, companies can leverage opportunity charging during off-peak hours to reduce energy draw during peak periods—without compromising productivity.
Smart Integration: Connecting Batteries to the Building
To fully capitalize on peak shaving, it’s not just about having smart batteries—it’s about connecting them to a smart system. While battery management systems (BMS) and telematics provide insights into individual battery health and charge status, true peak shaving performance requires integration with a Building Energy Management System (BEMS).
Through API-based communication, the BEMS can monitor real-time energy usage and battery availability, orchestrating charging schedules to avoid peak periods. This level of coordination ensures that energy demand is balanced across the facility, aligning operational needs with utility pricing and grid stability.
Charging Smarter, Lasting Longer
Charging behavior doesn’t just affect energy bills—it also impacts battery health. Modulating charging speeds, especially favoring slower charging during off-peak hours, reduces strain on the grid and minimizes heat generation, which is a key factor in battery degradation. This approach supports both cost savings and extended battery life, reinforcing the value of LiBs in a peak shaving strategy.
Peak Shaving Benefits
The most obvious benefit of peak shaving is reduced energy costs, but the advantages go further:
- Operational continuity during high-demand periods, even when utilities reduce voltage.
- Support for ESG goals by lowering carbon emissions and reducing reliance on fossil fuels.
- Community benefits, including a more resilient local energy grid and improved air quality.
Sharpen Your Razor
If your business already uses lithium-ion battery technology, now is the time to explore how to turn those batteries into razors that shave down high energy bills. If you haven’t yet adopted LiBs, their role in peak shaving makes them a smart investment—one that pays off in both energy savings and operational resilience.
For more information about the Advanced Energy Council: mhi.org/aec
For further articles from the Advanced Energy Council:
ICYMI: AEC’s ProMat 2025 Discussion Panel Overview
Second Acts: How Used Lithium-ion Batteries Can Continue Performing in Your Operations
Recalculating: Including Productivity Gains in Total Cost of Ownership
Charging Forward: What’s Next in Advanced Energy
What Is a Battery Passport? A Ticket to Lithium-ion Battery Transparency
ROI of Energy Sources: Automation
Advanced Energy Solutions Deliver ROI
