The Impact of Cutting the Peak Power of Individual Customers on the Total Peak Power of the Customer Group

Abstract

As power-based distribution tariffs become common, residential customers are incentivized to reduce individual peak demand. However, the system-level benefit of uncoordinated peak shaving remains uncertain. This paper quantifies how individual peak reductions translate to aggregated grid-level demand. Using hourly smart meter data from Finnish detached houses, individual apartments, and building-level common loads, modified consumption profiles were simulated by clipping individual demands to 70%, 80%, and 90% of their annual and monthly peaks. Monte Carlo simulations were then applied to evaluate the coincident peak demand of randomized groups ranging from 1 to 100 customers. Results demonstrate that while individual clipping reduces aggregated demand for small groups, this benefit diminishes rapidly as group size increases due to the natural diversity in consumption timing. These findings provide critical insights for distribution system operators designing cost-reflective tariffs and managing future grid capacity.