How can a load factor influence energy costs?

A higher load factor is indicative of more efficient usage of electrical energy over time. When a facility or system consistently operates near its maximum capacity rather than fluctuating between high and low usage, it signifies that energy resources are being utilized more effectively. This efficiency can result in lower costs per kilowatt-hour because utility companies often charge less for energy consumed when demand is stable and predictable. Efficient usage means fewer peak load periods, reducing the need for additional capacity and generation resources, which can be costly. Therefore, a higher load factor, by promoting steady and efficient consumption of electricity, can contribute to reduced overall energy costs.