Load factor: what your site's demand shape tells you

A site's load factor is its average electricity demand divided by its peak demand over the same period, written as a percentage. A high figure describes a site that draws close to its peak almost all the time; a low figure describes a site whose demand is mostly quiet with a few sharp peaks standing well above the average. It is usually the headline figure a feasibility study opens with, because one ratio summarises how heavily a site uses its connection, and a low figure is the clearest early sign that solar and battery storage are worth modelling.

The reason the number carries so much is that it depends on the shape of demand rather than on how much electricity a site uses. Two sites can consume the same amount in a year and have very different load factors. The lower the figure, the more of the year's demand is packed into a small number of high half hours, and the more of the connection is sized for peaks that occur rarely.

How is electricity load factor calculated?

Load factor is the average demand over a period divided by the peak demand in the same period, written as a percentage. The average is not measured directly; it is the total energy used, in kilowatt-hours, divided by the number of hours in the period. An annual load factor therefore divides the year's consumption by the 8,760 hours in a standard year, which is 24 times 365, and then by the peak demand, while a monthly figure uses that month's hours.

A worked example from the standard definition of electrical load factor shows the scale. A commercial site that used 57,200 kilowatt-hours over a 30-day month, with a peak demand of 436 kilowatts, had an average demand of about 79 kilowatts: that energy spread evenly across the 720 hours in the month. Its load factor is 79 divided by 436, about 18 per cent. The site holds a connection able to carry 436 kilowatts yet draws under a fifth of that on average, so for most of the month the larger part of its capacity carries nothing.

What a high or low load factor shows about demand shape

A site that runs steadily around the clock draws close to its average most of the time and has a high load factor. A site whose demand climbs through working hours and falls away overnight and at weekends spends much of the year well below its peak, so its load factor is lower. The lower the figure, the more of the site's demand is concentrated into a small number of tall half hours.

That concentration is visible directly in the half-hourly data. A flat profile sits near its own peak for most readings, while a peaky profile shows a low baseline with occasional tall spikes. Load factor is the one number that shows the difference without having to plot the whole year, which is why a feasibility study leads with it.

Why a peaky site is a storage candidate

The gap between peak and average is exactly what a battery can close, and several parts of a commercial electricity bill are set by the peak rather than by total energy used. A site's agreed maximum import capacity is sized to cover its highest half hour and charged per kVA every day whether the site draws that much or not, so a low load factor means paying for headroom that only a few peaks need. Time-banded distribution charges fall most heavily in the weekday evening peak, and the forward-looking part of transmission charges reflects demand in a small number of winter peak half hours.

Since the Targeted Charging Review, Ofgem's decision has been that the residual part of network charges is levied as a fixed charge rather than according to the energy a site uses, so trimming consumption at the margin does not reduce that part of the bill. What a battery changes is the peak that drives the agreed capacity, which is the cost a low load factor points to.

A low load factor earns a site a closer look. It shows that peak and average are far apart, which is the gap a battery is there to reduce, but whether storage pays depends on how concentrated the peaks are, how predictable they are, and what the site pays for energy and capacity. A feasibility study settles that, often alongside battery sizing, against the site's own half-hourly data.

Lupa opens a feasibility study with a site's load factor, taken from its own half-hourly file, and the platform reads the demand shape behind that single number to model how solar and storage would perform against the site's real peaks.