Example: A 1-minute spike of 1,000 kW averaged over 15 minutes: [ \frac(1000\ kW \times 1\ min) + (100\ kW \times 14\ mins)15\ mins = \frac1000 + 140015 = \frac240015 = 160\ kW ]

Why does this matter? Because utility companies do not just charge for energy consumed (kWh); they charge for the peak rate of consumption (MD). A factory that runs smoothly at 100 kW for 24 hours pays less in demand charges than a factory that sits idle for 23 hours but spikes to 500 kW for one 15-minute interval.

Simply put, Maximum Demand is the highest average load (in kilowatts, kW, or kilovolt-amperes, kVA) that an electrical installation draws from the supply network over a specified period—typically 15, 30, or 60 minutes.