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Power Factor is on your bill but what is it? And why do we have to correct it?


What Is Power Factor?

Power Factor (PF), is a ratio between the ‘Real Power’ and the ‘Apparent Power’ that is being drawn by appliances. In order to understand Power Factor, one must first understand that there are three types of power being fed from the grid:

Real Power (measured in kW)

A measure of how much power is being consumed by your appliances that are running.

Reactive Power (measured in kVar)

A byproduct of Real Power. Reactive Power is being supplied from the grid, but is actually not consumed by the end user.

Apparent Power (measured in kVa)

The combination of Real Power and Reactive Power.


Utility Billing for Power Factor

Utilities typically bill their customer by the real power consumed, and the maximum Apparent Power either in the past month or 12 months. They do this because maximum Apparent Power is the required energy that is pushed through to the cables for electricity to arrive their client’s appliances.

Through regulation/rules on PF, and through kVA peak demand charges on energy bills, utilities avoid overly generating Reactive Power. Because Reactive Power is not technically consumed by the customer, utilities cannot bill for it.

The Power Factor efficiency is only charged for and recognised financially in the KVA Demand Charges on your energy bill. If you are not being charged for KVA then Power Factor Correction will not provide you with a financial benefit.

A cliché that’s often used to explain PF is the ‘beer analogy’ — Real Power being the beer; Reactive Power being the foam; and Apparent Power being the combined package. Therefore Power Factor is the ratio between Real Power and Apparent Power. So the more beer (Real Power) compared to foam you have, the better the power factor is.


The Effect of Solar on Power Factor

Solar inverters in normal operation will output only real power, and as such will not influence the reactive power drawn from the grid. Since the real power provided by the grid is reduced, but the reactive power is not, the ratio of real to apparent power is reduced. When a solar system is offsetting all of the load on site, the power factor from the network perspective will be zero (only reactive power being drawn).


Solutions to the Effect of Solar on Power Factor

There are two main methods of correcting power factor issues. The first, and most widespread measure is using a Power Factor Correction (PFC) unit. There are devices that compensate for the reactive power being drawn, resulting in better, or near perfect, power factor. PFC devices were traditionally a bank of capacitors, but in recent times devices similar to solar inverters have provided a more compact and scalable solution. With Power Factor Correction, not only would the customer fall back within network regulations, but often gain a better financial outcome as well.

Another recent development is the ability of solar inverters to dedicate some of their capacity to PFC. With the right auxiliary equipment, some solar inverters can be configured to provide limited amounts of power factor correction. This requires the inverters to either have excess capacity (e.g. 90kW of panels in a 100kW inverter) or to limit their output to free up capacity. This solution requires careful planning and engineering to be used effectively, and is not yet common practice.

The selection and installation of the right PFC solution can have large impacts on payback periods and ROI. With the cost of PFC today, payback periods tend to land between one and five years, depending on the tariffs and the site energy characteristics.


When Would PFC Not Save You Money?

When you are being charged for demand measured in KVA, then Power Factor Correction, combined with Solar, delivers a holistic solution to your energy needs.

If you are not being charged in KVA, then Power factor correction will not save you any money off your power bills, it will not extend equipment life and your power factor will have no negative affect on your business operation. The only reason a business will invest in PFC when kVA isn’t being charged for, would be if the utility has measured and requested that the customer improve their PF to >0.9.

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