Reference Guide

Energy Management Glossary

Plain-language definitions of key terms in electricity demand, energy markets, demand response, and grid technology — written for facility managers, CFOs, and sustainability professionals.

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Commercial energy management involves a distinct vocabulary. Understanding these terms helps facility managers, CFOs, and sustainability officers make more informed decisions about electricity costs, demand response programs, and building technology investments. Use the alphabetical index above to jump to any letter, or scroll through all 15 terms below.

ADR (Automated Demand Response)

Software-controlled curtailment during demand response events. Unlike traditional manual DR — which relies on operators to reduce loads by hand — ADR platforms use predictive precooling and advanced forecasting to guarantee curtailment delivery, prevent post-event demand spikes, and maximize program revenue. The result is reliable grid participation without manual intervention or missed events.

Learn more: Automated Demand Response

BACnet

A standard communication protocol designed for building automation and control systems. BACnet allows devices from different manufacturers — thermostats, variable air volume (VAV) controllers, energy meters, lighting systems — to share data over a common network. Most modern commercial buildings use BACnet as the foundation of their building automation infrastructure, which is why software platforms like DemandQ can integrate without requiring new hardware.

BAS (Building Automation System)

The centralized control and monitoring platform for a building's mechanical systems — primarily HVAC, lighting, and electrical distribution. A BAS schedules equipment, enforces setpoints, and provides operational visibility. DemandQ integrates with existing BAS platforms as a software overlay, layering AI-driven demand optimization on top of standard building controls without displacing the existing system.

Coincident Peak

The condition that occurs when multiple HVAC units or other large electrical loads start operating simultaneously, creating a sudden, brief spike in total electricity demand. In commercial buildings with many rooftop units, a hot afternoon can trigger every unit to engage at once — a phenomenon sometimes called the "energy stampede." This single coincident peak can set the demand charge for the entire billing month, even if the building runs efficiently at all other times.

Demand Charge

A billing component on commercial electricity bills calculated from your single highest period of electricity usage during the billing month — typically your peak 15-minute average in kilowatts (kW). Even if that peak occurs only once, you pay the demand charge for the entire month. For commercial facilities, demand charges typically represent 30–70% of the total electricity bill, making peak demand reduction one of the highest-value energy cost levers available.

Learn more: Decoding Your Utility Bill

DERMS (Distributed Energy Resource Management System)

Software infrastructure that coordinates distributed energy resources — including flexible building loads, battery storage, solar generation, and EV chargers — across many sites for grid management purposes. A DERMS enables utilities, grid operators, and demand response aggregators to dispatch curtailments, manage virtual power plants (VPPs), and maintain grid stability. DemandQ's DemandMaster product serves as a DERMS platform for program operators managing fleets of commercial buildings.

Learn more: DERMS / DemandMaster

IDO (Intelligent Demand Optimization)

DemandQ's core AI-driven service for reducing peak electricity demand in commercial buildings. IDO uses patented queuing technology (US Patent #8219258B1 and US Patent #12222687B2) to intelligently coordinate when building equipment — primarily HVAC systems — operates, preventing coincident peaks without reducing equipment runtime or affecting occupant comfort. IDO is available as a cloud-hosted service or an on-premises deployment.

Learn more: Intelligent Demand Optimization

IPMVP (International Performance Measurement and Verification Protocol)

The globally recognized standard methodology for measuring and verifying energy and demand savings. IPMVP defines four measurement options (A through D) based on the rigor and boundary of the analysis. DemandQ uses IPMVP Option C — whole-building analysis — which compares total facility energy use before and after deployment, normalized for weather and occupancy. IPMVP-compliant reports are suitable for corporate sustainability disclosures, utility programs, and third-party audits.

kW (Kilowatt)

A unit of electrical power that measures the rate at which electricity is being consumed at any given moment — think of it as a speedometer for energy use. One kilowatt equals 1,000 watts. Your utility's demand charge is based on your peak kW reading during the billing period. Reducing your peak kW — not just your total consumption — is the primary mechanism for lowering commercial electricity bills.

Learn more: Understanding Electrical Energy

kWh (Kilowatt-hour)

A unit of electrical energy that measures the total amount of electricity consumed over time — think of it as an odometer tracking cumulative miles driven. One kilowatt-hour equals one kilowatt of power used continuously for one hour. Your utility's energy charge is based on total kWh consumed during the billing period. While important, energy consumption (kWh) is often less impactful on commercial bills than peak demand (kW), where demand charges can dominate.

Learn more: Understanding Electrical Energy

Price Mitigation

DemandQ's service for facilities operating in deregulated electricity markets. Price Mitigation monitors real-time wholesale electricity prices — with an 8-second response capability — and automatically curtails building loads when prices spike above a configured threshold. This protects commercial facilities from unexpected energy cost surges caused by market volatility, grid stress events, or extreme weather. DemandQ is a certified ERCOT market participant for this service.

Learn more: Price Mitigation

Queuing Technology

DemandQ's patented approach to eliminating coincident demand peaks — protected under US Patent #8219258B1. Rather than turning equipment off, queuing technology intelligently sequences when individual HVAC units and other cycling loads are permitted to start. By staggering their operation, the system prevents the simultaneous power draw that creates demand spikes. Equipment still runs its full cycle; it simply starts at a slightly different time within the allowable window. The result is a 10–25% reduction in peak demand with no operational impact through behind-the-meter (BTM) implementation.

Ratchet Clause

A utility billing provision that sets your minimum monthly demand charge as a fixed percentage — typically 50–90% — of your single highest peak demand recorded over the past 6 to 12 months. Under a ratchet clause, one high-demand event in summer can inflate your electricity bills through the entire following winter, even if your facility runs efficiently during those months. Sustained peak demand management eliminates ratchet clause exposure and prevents this carryover cost.

RTU (Rooftop Unit)

A self-contained, packaged HVAC unit installed on the rooftop of commercial buildings. RTUs integrate heating, cooling, and air handling components in a single enclosure, making them the dominant HVAC system type in retail stores, restaurants, and small-to-medium commercial buildings. Because facilities often have many RTUs that can start simultaneously after a setback period, they are the primary source of coincident demand peaks in commercial buildings.

Learn more: HVAC Systems & Peak Demand

VPP (Virtual Power Plant)

A network of geographically distributed energy resources — flexible building loads, battery storage, distributed generation, and EV chargers — that are coordinated through software to function as a single, dispatchable resource for the grid. A VPP allows many small commercial sites that individually cannot participate in wholesale energy markets to collectively provide significant grid services. DemandQ's DemandMaster platform aggregates commercial building loads into a VPP, enabling program operators to deliver demand response across hundreds of sites simultaneously.

Learn more: DERMS, VPPs & Grid Resilience

Have a question about a term?

Our team is happy to clarify any energy management concept or explain how it applies to your specific facility portfolio.