What is Power Factor?

Power factor is a measure of how much of the electrical current delivered from the grid is actually used to provide useful work such as heating, lighting and turning electric motors at your site. It does not mean energy efficiency as is sometimes believed, but rather the effectiveness of utilising the electricity distribution system without placing unnecessary additional load on it.

This is because most commercial and industrial lighting, as well as the electric motors that power fans, air conditioning and most industrial processes, actually consume two different forms of power. The best-known of these is “active” power, measured in kilowatts (kW), which is charged for by the electricity retailer as the total amount of energy consumed each month. This active power is generated at a power station and is what actually goes into creating heat and light, and turning the motors that power most machinery.

The other type of power is known as “reactive” power, and is much less well-known because it has historically been ignored in most cases, and still is not metered or penalised for most smaller energy users like residential connections. Reactive power, measured in “kilovolt-amperes reactive” (kVAr), is used primarily by inductive loads with electrical windings, which include electric motors and the magnetically ballasted lighting used in most commercial and industrial settings. These windings produce an electromagnetic field which is sustained by the constant draw of reactive power even though no actual energy is consumed in the process.

Reactive Power

Because both active and reactive power draw electrical current, they both increase the load on the supply system. The total loading is a combination of both power forms, as shown in the Power Triangle below. The “apparent” power (kVA) represents the total loading on the supply system, and is what electricity distributors must size equipment such as transformers and cables to be able to handle.

Power Triangle

“Power factor” is the ratio of active power to apparent power, i.e. the proportion of the electrical current drawn by the site that is actually performing useful work. If there was no reactive power, the active power and apparent power would be the same, giving a power factor of 1. In a more realistic situation with an active power of 100 kW and reactive power of 80 kVAr (giving an apparent power of 128 kVA), the power factor would be 0.78. A lower power factor means more loading on the supply system for the same amount of useful (active) power provided.

Electricity distribution charges typically make up 25 – 50% of total electricity costs to a site, and many of these charges are based on the site’s maximum demand of apparent power since this is what determines how much loading is placed on the network. Consequently, a poor power factor will be increasing these charges significantly, even if it isn’t obvious from looking at invoices.

Another common way that power factor can cost money is through the direct penalty charges that are applied by many electricity distributors in New Zealand. These are normally only applied if a site’s power factor drops below the target level of 0.95, and are charged as the “excess” reactive power relative to what it would have been at a power factor of 0.95. Direct penalty charges such as this are often used in conjunction with demand charges measured in apparent power, resulting in a double cost to sites where power factor is an issue.

Luckily, it is possible to minimise or eliminate these charges through the use of power factor correction equipment, which reduces the reactive load drawn from the network and thus minimises the load on the supply system. Contact us to find out how Energy NZ can remedy your power factor problems, whether large or small.