Why a poor power factor is brewing business trouble


Power factor should interest anyone seeking a profitable and reliable business with growth potential, writes Stephen Joyce, power quality business manager at ABB’s Power Grids business in the UK.

Power factor is a subject that is often seen as the sole preserve of electrical engineers. Yet it should attract the attention of anyone interested in the profitability and smooth running of a business, from facility management to the boardroom, because a site with a low power factor is effectively burning money. And high energy bills – with the added risk of financial penalties from your utility supplier – are only part of the problem. Power factor also impacts both the reliability of the network and its capacity to add new loads when your business expands.

When we talk about a site’s power factor (or PF) we are referring to the relationship between the active and reactive power on the network. It measures how effectively you use the electricity you buy and in an ideal world it would be one (unity). 

A useful analogy to help better understand the concept is a frothy latte. The capacity of the glass is the total apparent power as measured in kilovolt amps (kVA). The coffee body is the active power, measured in kilowatts (kW) that you can use to do work, while the froth on the top is reactive power measured in kVAR (kilovolt amps reactive) – some froth is useful but too much is a waste.

Most loads on an electrical distribution system are categorised as one of three types – resistive, inductive and capacitive. The most common in modern networks are inductive loads such as transformers, fluorescent lighting and AC (alternating current) induction motors. They need reactive power – the kVAR – to maintain the magnetising current they need to function.

One common example of reactive power is an unloaded AC motor. When all load is removed from the motor, you might expect the no-load current to drop close to zero. In reality, the magnetising current draws between 25 and 30% of full load current even when the motor is unloaded.

Why worry?

Generally, a value between 0.9 and 1.0 is considered good power factor, meaning that metered power and used power are almost equal. From the consumer’s perspective, you are using what you paid for, with minimal wastage. However, when ABB’s service engineers survey customer sites it is very common to find a much lower PF – sometimes down to 0.5 or below.

To demonstrate why a low PF is a concern, when it drops from 1.0 to 0.9 then 10% more current is required to handle the same load. But the relationship is not linear. A power factor of 0.7 requires approximately 43% more current – and a power factor of 0.5 requires approximately 200% (twice as much) current to handle the same load.

When your PF is low, the utility supplying the site must provide all the power needed – both productive and reactive. For the utility that means larger generators, transformers, conductors and other system devices that push up their own capital expenditure and operating costs. These costs have to be passed on to industrial users. And, in some cases, they are made explicit in the form of power factor penalties.

Compelling reasons

Clearly, improving your power factor can contribute directly to your bottom line in terms of energy bills. But there are other compelling reasons to take action. First, reducing the load on the network will help improve the operating life of equipment, boosting reliability and reducing the need for maintenance and replacement.

However, the most significant reason is that optimising PF can help defer, or possibly even avoid completely, major capital investment to increase a site’s load capacity to facilitate the installation of new equipment.

How do you solve a low PF?

A low PF is solved by adding power factor correction (PFC) capacitors to the site distribution system. These capacitors work as reactive current generators that supply reactive power (kVAR) to the system.

By generating their own reactive power, industrial users free the utility from having to supply it. Therefore, the total apparent power (kVA) supplied by the utility will be less, which is immediately reflected in proportionately smaller bills. Capacitors also reduce the total current drawn from the distribution system and subsequently increase system capacity.

PFC capacitors are rated in electrical units known as ‘VARs’. One VAR = one volt ampere of reactive power. VARs are units of measurement for indicating how much reactive power the capacitor will supply. As reactive power is usually measured in thousands of vars, the prefix ‘k’ is added to create the more familiar ‘kVAR’ term. The capacitor kVAR rating shows how much reactive power the capacitor will supply. Each unit of kVAR supplied will decrease the inductive reactive power demand by the same amount.

Let’s take as an example a low voltage network that requires 410 kW active power at full load, with a measured PF of 0.7. Therefore, the system’s full load consumption of apparent power is 579.5 kVA.

If 300 kVAR of capacitive reactive power is installed, the power factor will rise to 0.96 and the kVA demand will be reduced from 579.5 to 424.3 kVA. That means savings can vary from 20 to 30% or even more in some cases. This cumulatively translates to considerable financial savings with the PFC equipment often paying for itself in a matter of months.

Practical PFC installations

In practice, PFC is installed in one of three ways:

• Individual capacitor units for each inductive load (in most cases a motor)

• Banks of capacitor units grouped in an enclosure that is connected at a central point in the distribution system. They come in two types: Fixed capacitor banks comprise multiple capacitors racked in a common enclosure with no switching; while automatic capacitor banks, also called ‘cap banks’ have capacitors in a common enclosure with a contactor or thyristor (SCR) switched by a controller

• Combination, where individual capacitors are installed on the larger inductive loads and banks are installed on main feeders or switchboards


Low power factor is a critical business issue that impacts on a site’s profitability, reliability and growth potential. It is remedied by PFC solutions that offer rapid deployment and a fast return on investment.


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