All about power factor

Keeping track of your power factor, which is a measure of the efficient use of electricity, may help your business save on electricity costs. 

For any business, minimising costs is a major goal. One of the ways businesses often achieve this goal is by trying to ensure the efficient use of all necessary resources, including electricity.

While households may save on electricity costs by using energy-efficient appliances, businesses usually don’t have the same choices in their setup. What businesses can do, instead, is compare the electric power consumed by their equipment with the power supplied to their worksite by calculating the power factor. This power factor is mathematically expressed as the ratio of the power utilised (also called real power) to the power supplied (also called apparent power). 

The power used by electrical equipment is typically measured in kiloWatts (kW), while that supplied by networks is measured in kiloVolt-Amperes (kVA). The power factor equation can be written as:

What is a good power factor?

In practice, the power supplied from the grid exceeds the power used at a given location. As a result, the power factor for the location is a decimal number between 0 and 1. A power factor value closer to 1 indicates a lower amount of power lost and, consequently, more efficient electricity usage. The ideal power factor range is 0.9 to 1, with any lower value likely to translate into higher electricity bills and even a demand charge, depending on the electricity tariff offered by the distribution network.

Measuring the power factor requires determining the most convenient approach. For instance, a power data logger can be used to measure the power factor for either each machine or equipment or each electrical circuit installed at the worksite. Some electricity meters may also allow power factor measurement either directly or through providing data on the real power consumed and power lost. Businesses using induction motors, electric arc furnaces, or transformers may need regular power factor tracking. With such equipment, the power factor drops when the current lags behind the voltage supply, meaning that the current doesn’t start flowing as soon as the power supply is switched on. If the power factor falls below 0.9, power factor correction may be necessary.

What is power factor correction?

In Australia, businesses may need to maintain a power factor of 0.9 or above to comply with state or territory laws. If the power factor drops below this mandated value, businesses can install special equipment to correct the power factor. However, they’ll need approval from the distribution network before they can call a service provider to install the correction equipment.  The cost of correction equipment can depend on the equipment’s size, which in turn varies with the capacity of the switchboard installed at the worksite and the location where the correction equipment can be set up. A decrease in power factor at a worksite where power factor correction equipment is already installed probably means that the equipment needs to be repaired or replaced.

Even if it is not mandatory to install power factor correction equipment, businesses stand to benefit from setting it up in several ways. From a financial perspective, businesses can decide whether to install correction equipment by first calculating how much they stand to save by correcting the power factor. If this savings exceeds the cost of installing power factor correction equipment, the business will end up saving on operational costs. Correcting the power factor also safeguards against loss of electric power which can then be utilised for business activities. Also, since electrical losses tend to get released as heat, ensuring efficient use can have a positive environmental impact as well.