What Does Power Factor Mean For My Business?

What solutions are readily available for business owners to improve energy savings and reduce electricity costs? Installation of Power Factor Correction equipment (PFC) is one answer.


Power factor is a ‘snapshot’ of how efficiently a consumer is using electrical power supplied from the network. In mathematical terms, it is the ratio of the active or usable power measured in kilowatts (kW), to the apparent or total power measured in kilovolt amperes (kVA), calculated as kW/ kVA = PF.

Apparent power (kVA) is the vector sum of the required active power (kW) and reactive power (kvar). While not performing any ‘useful’ work, reactive power is an essential and unavoidable element of electrical networks.

A consumer with a lower power factor than a neighbour of identical size will require additional kVA be supplied by the network. As such, additional power has to be generated and transmitted which has inherent incremental costs to the consumer and provider.

Power companies address the additional costs in a number of ways. Most commonly consumers are billed based on their kVA demand rather than kW demand to encourage more efficient use of energy, or in some cases consumers can face penalties for having poor factor.

Generally a consumer will have a connection agreement with an energy provider that dictates and defines requirements of power factor. Falling outside of these limits can result in penalties, imposed restrictions on expansion or in extreme cases disconnection. So it is generally in a consumer’s best interest to monitor and regulate power factor.


Power Factor Correction (PFC) is the process of reducing the kVA demand of a consumer by locally generating the site’s reactive power requirements. Local generation results in a reduction of reactive power drawn from the grid and hence a reduction in overall kVA consumed.

PFC is most commonly achieved by the installation of optimally sized capacitor banks that automatically switch in and out based on measured power requirements to achieve a target power factor (typically 0.95 or greater). By improving power factor, consumers are greatly improving the efficiency of their site and will potentially generate large reductions in energy costs.

 Benefits include:

  • Reduced PFC tariffs and penalties on your electricity bill
  • Increased available load/equipment capacity
  • Improved system efficiency
  • Improved quality of electrical supply
  • Reduced greenhouse emissions
  • Extended working life of plant machinery

Find out more about Ampcontrol PFC