Power Factor: Understanding its Importance in Energy Efficiency

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Power factor is a measure of how efficiently electrical power is being used in a system. It is the ratio of the power that is used to do work (Active Power, measured in kilowatts or kW) to the power that is supplied to the system (Apparent Power, measured in kilovolt-amperes or kVA).  Simply put, power factor tells us if the electrical power supplied to a system is being used effectively and efficiently. It’s expressed as a numerical value between zero and one, and a higher power factor that’s closer to one indicates a more efficient and effective system.  In this article, we look deeper into what makes power factor important and why improving it is necessary for businesses.

Why is power factor important?

Understanding how power factor is calculated allows users to assess if their system is not wasting the electrical power it consumes. Basically, a higher power factor is more desirable because it means the electrical power is being used more efficiently. On the other hand, a lower power factor indicates that there is wastage, resulting in higher costs. 

In recent years, many businesses have shifted from a kilowatt tariff to a kVA tariff. This means that they are charged based on the apparent power (kVA) supplied, rather than the active power (kW) used. To explain, apparent power is the total electricity available for powering a system or manufacturing equipment, for instance, while active power (also called real power) is the electricity that is actually used. Basing electricity costs on apparent power versus active power makes power factor correction even more important because a low power factor can result in additional charges for the wasted power supplied.

For example, let’s say a business has an electrical system with an apparent power (kVA) of 100 and a power factor of 0.8. This means that the actual power being used (kW) is 80 (100 x 0.8 = 80). However, the business will be charged for the full 100 kVA, even though only 80 kW is being used. If the power factor can be improved to 0.95, for instance, the actual power being used will be 95 kW (100 x 0.95 = 95), resulting in lower charges.

To reiterate, the important thing to note is that most suppliers will charge the customer on the basis of the total energy supplied (Apparent Power or kVA), so it makes more sense to maximise the electricity being supplied. A power factor correction system can help ensure that the customer doesn’t waste energy, thereby avoiding unnecessary costs.

The beer analogy

A fun and perhaps easier way to visualise power factor is to compare it to a nice, cold, pint of beer. 

The entire glass and its contents represent power, with the elements standing for the different factors that make up power.

To start, the glass is Apparent Power (kVA). The actual beer is Active Power (kW) whilst the foam on top is Reactive Power (kVAR). To get the Power Factor (the ratio between the “beer” and the “foam”), the “beer” is divided by how much the mug can contain. 

And of course, since you’re paying by the glass, ideally, you would want more beer than foam. It’s the same with electricity. You want a more efficient system that doesn’t waste energy because that would cost you more.

How to improve power factor?

Power factor can be improved by adding power factor correction equipment to an electrical system. This equipment can take the form of capacitors or other reactive devices that can store electrical energy and release it back into the system at the appropriate time. By doing so, they help reduce the amount of reactive power (measured in kilovars or kVAR) needed to operate the system, which in turn increases the power factor. 

Power factor correction equipment reduces the kVA demand charge on your electricity bill.

There are also several advantages to improving power factor such as:

  • Reducing electricity costs
  • Reducing the size of electrical equipment needed to operate a system
  • Improving the reliability and lifespan of the equipment
  • Reducing carbon footprint

among others, which you can speak to an energy management consultant about if you’re interested in exploring power factor correction for your business and reaping the benefits.

Power factor correction is often overlooked and in most cases represents a straightforward return on investment to reduce your energy costs.

If you have a kVA charge on your invoice (under the bill item Network Charges) you may benefit from power factor correction. You can get started on the path to improving your power factor with Leading Edge Energy by simply completing this letter of authority form and providing an invoice for evaluation. Our team of experts can help you determine the best power factor correction equipment to install and provide you with a cost estimate.

Don’t let a poor power factor result in wasted energy and higher monthly costs. 

Take action now and contact us to explore your power factor correction options.

Leading Edge Energy is proud to be a signatory of the National Customer Code for Energy Brokers, Consultants and Retailers.