The new year brings with it a new budget, new KPIs, and most likely, new utility rates. 2026 promises higher energy rates across the board, including increases in demand charges. Determined at the moment in time your building uses the most energy within the billing period, demand charges for electricity and gas promise to be surprising this year.
For many commercial and industrial customers, demand charges can make up 30% or more of the monthly electric bill, and the “peak demand” is often measured over just a 15-minute interval. Peak demand refers to the single highest level of energy use a building reaches during a billing period—and it often drives a disproportionate share of total energy costs.
If you’re a building owner or facility manager charged with managing costs and recommending system improvements, demand charges need to be part of your analysis. Just benchmarking energy use helps, but usage tracking doesn’t recognize energy peaks. A complete cost-cutting expedition will include a deep dive into what causes your building’s peak demand—an analysis that requires review of the building’s operations including schedules, system start-up procedures, set-points, equipment controllability, and more. That’s why an energy audit is the one tool you need to better understand demand charges and how you might mitigate them. The insights an energy audit provides explain not only where your energy is going, but how it is used and what opportunities may exist to manage peak loads. These insights matter most for commercial building owners and facility managers who are responsible for capital planning, system upgrades, and operating costs.
Peak demand is simple in concept. It’s the highest rate of electricity use your building hits during the billing period. Utilities base demand charges on the prior month’s peak usage, making the separate line-item charge a factor you cannot predict. While peak demand events occur in every billing cycle, they often coincide with periods of system overlap, startup, or operational stress. Even in buildings that feel “efficient” based on annual energy use—how systems start up, overlap, and operate under extreme conditions can cause costly surprises.
Winter demand charges are particularly challenging because an increasing amount of electricity is generated with natural gas in the U.S. Space heating is the largest energy end use in commercial buildings—accounting for about 32% of total energy consumption in the U.S.—even though much of it is still served by natural gas. Particularly on cold days, at the same time your building is doing its morning warm-ups, its daily peak usage will come at a time when there is extreme demand for natural gas—either directly or via natural-gas generated electricity.
That’s why managing peak demand is not just about “using less,” it’s about using power differently. The recommendations delivered in an energy audit give facility leaders the ability to not only manage how much energy the building uses, but when and how it is used.
When peak drivers aren’t understood, facility leaders may miss an opportunity to maximize capital improvement budgets for cost savings. Money goes to the loudest pain point, not the real one, and the building ends up with a new piece of equipment that still triggers high peak demand because schedules, controls, and sequencing never got fixed. Without thorough and detailed review of energy use side-by-side system schedules, set-points, and operating procedures, facility leaders only see one side of the coin. Linear decision-making based only on energy use might lead to a single system replacement or system recommissioning, versus an investment or change in procedure that delivers peak results.
A robust ASHRAE Level II energy audit should start with a review of energy use, built from utility data, breaking down which building systems are using the energy. When that baseline of energy use is then linked with operational data, including schedules, setpoints, and start-up procedures, it can then explain how and where the building uses energy, especially during peak demand. It should also deliver a prioritized list of Energy Conservation Measures with costs, savings, and payback so that leadership can fund the right work first.
At Emerald, our Energy Audit service is designed to do just this, and we often see audits uncover savings opportunities of 15% to 30% with capital upgrade payback periods under three years in older buildings.
That is why energy audits are turning into a planning requirement, not a “nice to have.”
A well-executed energy audit—especially one that incorporates energy modeling—can identify, quantify, and prioritize complex energy-saving opportunities across building systems. In many cases, the audit itself provides the clarity owners need to move forward.
However, some opportunities uncovered through an energy audit involve system interactions or process conditions that warrant additional engineering diligence before implementation. In those cases, deeper engineering analysis helps translate audit findings into constructible, cost-effective solutions.
At Liniform Commercial Laundry, for example, managing temperature for employee health and safety was a priority alongside emissions reduction and utility cost savings. An energy audit identified heat recovery as a strong opportunity within the laundry process. From there, Emerald’s mechanical engineers worked through the detailed design considerations—how heat could be captured, reused, and integrated without disrupting operations—so the concept could be implemented effectively.
This is where Emerald’s broader technical capabilities come into play. When an energy audit reveals opportunities that benefit from additional analysis, our engineering teams can step in seamlessly—ensuring recommendations are not only cost-effective on paper, but practical, durable, and aligned with real-world operating conditions.
We explore how audits and engineering expertise work together to support smarter system decisions in this short conversation with our Crete United colleague.
Before projects are finalized or major investments from the 2026 budget move forward, validate capital improvement plans with an energy audit. Make sure your plans include a review that examines what is really driving costs—especially during peak demand. At Emerald Built Environments, a Crete United Company, we offer Energy Audit services which give you a baseline, an energy efficiency roadmap, and the financial justification to cut costs and plan upgrades with less guesswork. Plus, it can be tied into a larger strategy to guide your organization’s long-term risk mitigation and resilience planning and reporting.
If you’re not ready for a full audit yet, check out our Free Quick Utility Checkup to get a quick performance snapshot and learn if an energy audit makes sense as your next move.