Consumption Vs. Demand
When speaking about electrical energy, there are two related, yet different, measurement parameters that need to be understood: consumption and demand.
Consumption is a more familiar concept for most people. Simply put, it is the total amount of energy used. Demand is the immediate rate of that consumption.
A simple analogy is a pile of rocks of various sizes and weights. Let's say that you were moving the pile. The total weight of the rocks is similar to the consumption because it represents the total energy you would expend. The weight of the largest rock is similar to the demand because it represents how much power you would need to have "available" to move that one rock at that instant in time.
Mathematically, energy consumed is represented by kilowatt hours (kWh). These are what the electric meter records as the dials turn. The rate of consumption would be kilowatt hours per hour or just kilowatts (kW). Typically electric demand is not measured for residential customers. However, commercial customers are charged for both the energy used and how fast they use it. The faster the collective customer base uses energy the more the utility must be able to supply.
How much energy the system must be able to generate to meet the instantaneous load (even if it's only for a short duration) is called its capacity. This concept is also used when designing a system or building so that electrical distribution equipment is properly sized. The capacity of a utility must be able to meet the demand so no customers are deprived of their electricity.
Everyone probably knows somebody who can't turn on their toaster and microwave at the same time without blowing a fuse. This example demonstrates a circuit that does not have the capacity to meet the demand. However, if these devices are operated one after the other, the energy would be readily available.