How Power Factor Correction Can Help Your Business Save Money

Many large businesses consume high levels of energy in surges, resulting in high business overheads. If you’re looking to reduce your business’ energy costs, this article will help you with everything you need to know about power factor correction for your business — including what it is, how it works, and how power factor correction methods can help your business save money.

What is power factor?

In simple terms, power factor is a measurement of how effectively your business uses the energy that your business is supplied from the electrical grid.

More technically, power factor is the ratio of true power (the actual power your business uses in kilowatts) to the total power (kVA) consumed by your business in a given period.

Why is power factor correction important for my business?

In the past, most energy retailers in Australia charged businesses based on true power (per kilowatt) usage, plus a service fee. However, the way that energy retailers charge for electrical power has changed dramatically in recent years.

If you are a large business, it is likely you are actually charged under a kVA demand tariff: a combination of the true power you use in kilowatts, and your power demand on the network (measured over 30-minute intervals). This corresponds to your peak energy usage: the highest amount of power you use. This means if your business has fluctuating periods of high energy use, you will have a more expensive energy bill.

Power factor correction can help your business reduce this wasted electricity.

Here’s a simple way to check whether power factor correction could help decrease your business’ electrical costs:

To check if your business is charged under a network demand tariff (the more costly option), see if there’s a ‘kVA demand tariff’ listed on your energy bill. If there is, this means your electricity service provider is charging you for peak energy usage in addition to real power usage. If this is the case, power factor could greatly benefit your business by decreasing the amount of power your business consumes from the electrical grid.

How do you calculate power factor?

Power factor is typically calculated as a measure between zero and one, with one indicating ‘unity’ or the most effective use of power. When your power factor is less than one, this ‘missing’ power is known as reactive power. An excessively high reactive power creates an extra burden on the electricity supply system, resulting in a lower power factor.

Here’s an example to illustrate:

Imagine your business has a power factor of 0.5. This means that 50% of the power supplied to your business is active power, and 50% is reactive power. Definitely room for improvement!

What are the impacts of having a low power factor?

If not resolved, a low power factor can be wasteful and extremely costly for your business. For starters, the lower your power factor, the higher your kVA demand and the higher your electricity costs.

However, a lower power factor has downsides in addition to this. Namely, it can stress your internal electricity infrastructure, resulting in overheating and degeneration of your electrical equipment. It can also lead to motor failure and more frequent power outages in your business.

What are the benefits of fixing low power factor?

From a business perspective, power correction can lower your electricity costs, increase your business’ electrical assets’ efficiency and lifespan, and reduce the risk of operational downtime. It also helps your business reduce its carbon footprint by conserving energy.

From an electrical perspective, power factor correction helps maximise the current-carrying capacity of your electrical infrastructure, prevent electrical overload and improves voltage to equipment.

How can I make my business more energy-efficient?

Power factor correction and energy efficient equipment upgrades are both excellent ways to reduce your energy bills. In fact, we feel they work best in tandem.

When it comes to power factor correction, the best and easiest way to improve your power factor is to have a power factor correction unit installed. Power factor correction methods, such as a power factor correction unit or circuit, are designed to correct any inefficiency that exists in the power supply and decrease your peak demand on the electricity grid. This is one of the most powerful ways to consistently reduce your business’ energy bills.

How does power correction work?

Power factor correction units decrease your total amount of electrical demand by using a bank of capacitors to offset an inductive load. Alternatively, it may use reactors if the load is capacitive. Ask one of our electricians if you’d like to know more.

I want to improve my business’ power factor. What is your advice?

Since every commercial and industrial business has different power requirements and a unique electrical infrastructure, it’s important to connect with a energy specialist who can offer you custom recommendations. We recommend asking an expert to assess your current electricity usage patterns, so that you can receive recommendations tailored to your business operations, equipment and site.

Final Thoughts: Power Factor Correction Can Save Your Business Money

Installing a power factor correction unit can dramatically lower your electricity bill and help your business consume power more efficiently. We recommend investing in a combination of power factor correction and energy-efficient appliances, to keep your business’ carbon footprint small and your electricity bills low.

Interested in exploring how power factor correction can help your business? Peak Voltage’s team of energy specialists will be happy to help you determine your power factor correction needs. We provide a complete power factor correction and energy efficiency service. Give us a call on (07) 3272 7325 or contact us through our website