Power Factor

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Welcome to Genesis Now’s on-line guide to Power Factor with emphasis on electricity customers in Victoria and NSW (Australia).



Victorian electricity distribution companies are moving from kW to kVA charges. This change will give electricity customers a financial incentive to have a high power factor. This page describes the situation and a strategy to minimise capital costs and ongoing expenses.


The Issue

Most businesses buy electricity from a remote generator. In Victoria and most of NSW, the electricity has been metered in kilowatts (kW, a measure of power) and kilowatt-hours (kWh, a measure of energy). This is reasonable, as the number of kilowatt-hours used governs how much useful work the electricity can do for the customer.

So far, so good.

However, getting the electricity from the power station to the customer requires wires and transformers, etc. and these cost money. The size of the wires required depends on the current or flow of electricity which they must be able to carry.   And the size of the wires determines their cost.

Here’s the rub:

The electrical current
(which governs the cost of the wires which
the electricity company has to pay for)
is not directly proportional to The real power
(which governs the amount of money
the electricity company is paid)


Another factor comes into play, and it’s called the power factor. Basically, the lower the power factor, the bigger the wires needed to supply the electricity customer with a given amount of energy in a given period. Little wonder the electricity distribution companies do not like low power factors.

You could say that the power factor is the fraction of the electrical current (or flow) which is doing useful work in your premises.


(For a more detailed explanation of power factor, see the definition and formulae on this page).

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What Power does the Electricity Company Have?

Under the Victorian “Distribution Code”, electricity consumers in Victoria can be required to maintain a power factor of at least 0.8 (although there is little explanation of what will happen if a customer does not comply with this requirement).  This probably goes a long way toward explaining the other action an electricity distributor can take: charging a “kVA tariff”.

Basing electricity charges on “kVA” instead of kW (kilowatts) means that customers with a low power factor will pay more for their useful electrical power.

So can an electricity customer improve the power factor of their electricity consuming equipment?  Yes.

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Power Factor Correction

There are two ways of improving the power factor of a customer’s electrical system:

  • Bulk power factor correction equipment, which is installed at customers switchboard. This is a “bolt-on” fix
  • Fixing the poor power factor at its source. Examples include, ensuring that motors are not oversized, electronic variable speed motor drives, using efficient controls, high-efficiency high-power factor lighting

Be aware that the costs, benefits and environmental impacts of these alternatives are quite different, and the advice you receive may not be in the best interest of your business.

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Money Money Money

Improving the power factor of customers’ electrical installations is good for the electricity company, because it makes better use of their assets, and may delay or avoid capital expenditure to upgrade their infrastructure assets.  That’s Money in the bank.

Electricity companies can also use their customer records to actively promote and sell power factor correction equipment. More Money in the bank (their bank).

But there is another financial factor in how you deal with power factor.  By fixing the power factor at the source, you can often:

  • Reduce real energy consumption, reducing ongoing costs further than power factor correction alone can
  • Achieve other quality and productivity improvement benefits
  • Reduce the capital cost required to improve the power factor

We strongly recommend that you consider the more elegant and cost-effective solution of fixing power problems at their source, before considering “bolting on” power factor correction equipment.

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Your Business, Your Choice

It’s your business, and your right to decide the most appropriate and cost effective method of power factor correction.

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Definition of Power Factor

The Power Factor is the real Power (measured in Watts) divided by the Apparent Power, so:

                                                                  (Watts) average real power
                         So Power Factor (pf) = ——————————-
                                                                  rms Volts x rms Amperes

The voltage in an Alternating Current circuit will provide the “pressure” to make the current flow. However, it is the load or appliance which will determine how the current flows in response to the voltage. If the current-time pattern coincides perfectly with the voltage-time pattern, the current and voltage are said to
be “in phase” and the power factor is 1.

When the current lags behind the voltage, the powerfactor will be less than 1.

                          Power = Voltage (rms) x Current (rms) x (powerfactor).

For a resistive appliance such as a heater or incandescent light, the power factor will be 1.

For an appliance where the current lags behind the voltage, such a fluorescent light, the power factor will be less than 1.

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List of formulae:

  • kW = * pf
  • kVA = kW / pf
  • pf = kW / kVa
  • pf = cos(phase angle)
  • kVA2 = kW2 + kVAR2

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Genesis Now will be happy to discuss power factor in your business, free of cost or obligation.
To ask a question or arrange a visit, please contact us.

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Relevant Pages

If you suspect that you have a problem with the supply voltage, please see our supply voltage page.

If you are concerned about power supply reliability, blackouts & emergency power, please see our emergency power page.

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