Financial Sustainability: Improve business opportunities with Power Factor Optimisation

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Financial Sustainability: Improve business opportunities with Power Factor Optimisation

Continuing from our previous blog, this discussion looks at optimising power factor on site and how it can reduce your electricity costs.

Put simply, Power Factor (PF) is a measure of how effectively buildings are using their electricity.  Like a car out of tune, a poor PF will add to your electricity cost and waste energy.

PF optimisation equipment usually pays for itself in less than two years.  By installing the equipment, you will receive a reduction in the peak demand portion of your electricity account.  The equipment is usually installed next to the main switchboard.  Improving PF from  0.7 to 0.95, a customer may reduce its kVA demand charges by 25% each year.

What is Power Factor ?

PF compares the power available at the switchboard to the amount being used by plant and equipment.  It is calculated as the ratio of kilowatts to kilovolt amps i.e. kW/kVA. 

Another way to explain PF is to imagine that it is like water running through a  pipe.  If there are no leaks, the water going in one end and coming out the other end is the same.  However, if there are leaks in the pipe, you must turn the tap on to increase the pressure to maintain the constant water flow.  As a result, the pipe size before the leak must also be increased to accommodate the increased pressure. 

When we talk about electricity, the building will have to use bigger equipment e.g. cables, switchboards, etc or more power to get the same results.  Commercial and industrial customers with low PF are placing an undue demand on the electricity network and causing excess greenhouse gas emissions.

What are the benefits ?

The benefits of PF optimisation are:

  • Electricity cost savings.
  • Less chance of cables and equipment overheating and failing.
  • More power available for site or building expansion, without needing to install new switchboards and larger cables.  Improving PF from 0.75 to 0.95 produces a 20% power uprating in switchboards.
  • Better quality of electricity supply, with lower voltage drops which may cause some equipment and motors to breakdown or be damaged.
  • Compliance with the appropriate network distribution code.

The amount of PF optimisation is determined from the site’s load profile, current PF and past electricity accounts.  Customers on a  kVA demand tariff or kW demand tariff with a PF penalty should consider PF optimisation.

Please contact Susmet to assess your PF optimisation and costs, with potential savings on your electricity bill.


This blog is part of a continuing series discussing sustainability and energy management issues. Contributions featuring achievements, techniques, products, and processes are welcome. Please feel free to contact Susmet to suggest ideas on future issues. Whilst every effort is made to see that no inaccurate or misleading data, opinion or statement appears in this blog, Susmet accepts no responsibility or liability whatsoever for the consequences of any such inaccurate or misleading data, opinion, or statement.  

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