Understanding Power Factor and How it Affects Electricity Bills

Emmanuel Odunlade
9 min readJun 27, 2019

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Aside from safety and reliability, several other goals including efficiency should be pursued in the design and implementation of electrical systems. One of the measures of efficiency in an electrical system is the efficiency with which the system transforms the energy it receives into useful work. This efficiency is indicated by a component of electrical systems known as the Power Factor. The power factor indicates how much power is actually being used to perform useful work by a load and how much power it is “wasting”. As trivial as its name sounds, it is one of the major factors behind high electricity bills, power failures and sometimes the imbalance in electrical networks.

To be able to properly describe power factor and its practical significance, it is important to refresh your memory about the different types of electrical loads and components of Power that exist.

From basic electricity classes, electrical loads are basically of two types;

  1. Resistive Loads
  2. Reactive Loads

Resistive Loads

Resistive loads, as the name implies, are loads are made up of purely resistive elements. For this kind of loads (considering ideal conditions), all the power supplied to it are dissipated for useful work due to the fact that the current is usually in phase with the voltage. A good example of resistive loads includes incandescent light bulbs and batteries.

Relationship between current and voltage for a Resistive Load

For this kind of loads, a power component known as Real/Active/working Power is associated. We will take a closer look at it in a bit.

Reactive loads

Reactive loads, on the other hand, are a little bit more complex. While they cause a drop in voltage and draw current from the source like resistive loads, they dissipate no useful power( no work was done).

Reactive loads can either be capacitive or Inductive. In inductive loads, the power drawn is used up in setting up magnetic flux without any direct work performed, while for capacitive loads, the power is used in charging the capacitor and not directly producing work. The power thus dissipated in reactive loads is referred to as Reactive power. Reactive loads are characterized by the current leading (Capacitive loads) or lagging (Inductive loads) behind the voltage, as such, a phase difference usually exists between the current and the voltage.

Relationship between Voltage and Current for an Inductive Load

The variations in these two types of load brought about the existence of three power components in electrical systems, namely;

  1. Actual Power
  2. Reactive Power
  3. Apparent Power

To pick them one after the other;

Actual Power

This is the power associated with resistive loads. It is the power component dissipated to the performance of actual work in electrical systems. From heating to lighting, etc., It is expressed in Watts (W) (along with its multipliers, kilo, Mega, etc.) and symbolically represented by the letter P.

Reactive Power

This is the power associated with reactive loads. As a result of the delay between voltage and current in reactive loads (either capacitive or inductive), the energy dissipated, produces no work. It is referred to as reactive power and its unit is Volt-Ampere Reactive (VAR).

Apparent Power

Typical electrical systems comprise of both resistive and inductive loads, think about your light bulbs and heaters for resistive loads, and equipment with motors, compressors, etc as inductive loads. Thus in an electrical system, Total Power is a combination of the actual and reactive power components, this total power is called the Apparent Power.
is given by the sum of the Actual power and reactive power. Its unit is volt-amps (VA) and represented mathematically by the equation;

Apparent Power = Actual Power + Reactive power

This combination leading to the apparent power is what brings about the power factor.

In Ideal situations, the actual power dissipated in an electrical system is usually greater than the reactive power. The image below shows the vector diagram drawn using the three Power components.

Vector Diagram

Transforming the vector diagram, we get the triangle below; none as the power triangle.

Power Triangle

By obtaining the cosine of the angle theta, we are able to decipher the efficiency of the system in using the power it receives for work. This efficiency evaluated as the ratio of the actual power to the apparent power is referred to as the power factor with values between 0 and 1. From the power triangle, according to the cosine rule (Adjacent over hypotenuse), the power factor can also be estimated as the ratio of actual power to the apparent power. mathematically;

P.F.  = Actual Power / Apparent Power or P.F. = Cosϴ

Putting this side by side with the equation for determining apparent power, it’s easy to see that an increase in reactive power (presence of a high number of reactive loads), leads to an increase in apparent power and a larger value for angle theta, which ultimately results in a low power factor when its cosine (cos) is obtained. On the flip side, a reduction in reactive loads ( reactive power) leads to an increased power factor, indicating high efficiency in systems with less reactive loads.

Importance of Power Factor

At very low power factor values, a large quantity of energy from the mains is wasted as a chunk of it will not be used for meaningful work due to the presence of more reactive loads indicated by the low power factor. This place a strain on the supply system as both the real power required by the load and the reactive power used to satisfy reactive loads will be drawn from the system to meet the requirements of the load.

This strain and “wastage” typically leads to huge electricity bills for consumers(especially industrial consumers) as utility companies calculate consumption in terms of apparent power, as such, they end up paying for power which was not used to achieve any “meaningful” work.

Even in situations where the power is being provided by the company’s generators, money is wasted on bigger generators, larger sized cables, etc., required to provide power when a good number of it is just going to waste.

To better understand this, consider the illustration below;

A factory operating a 70kW load could be powered successfully by a Generator/ Transformer and cables rated for 70 kVA (using p.f. = Real Power/Apparent Power ) if the power factor is 1(Resistive Load with Zero Reactance). Maybe with some more KVA for tolerance but we’ll leave it at this for the sake of this article. However, if the load is changed to one with the same 70KW rating but a power factor of say 0.6, a larger generator or transformer rated for 116.67 kVA (700.6) will be required, as the generator/transformer will have to supply the additional power for the reactive load.

Asides this heavy rise in power requirements, the size of the cables/conductors used would also need to be increased, leading to a significant increase in equipment cost and increased power losses as a result of the resistance along the conductors.

The punishment for this goes beyond high electricity bills in some countries, as companies with poor power factor usually get fined huge sums to encourage rectification.

Improving the Power Factor

With all that has been said, you will agree with me that it makes more economic sense to rectify the poor power factor than to keep paying huge electricity bills, especially for large industries. Correcting the overall Power factor could see industries and manufacturing plants especially, save over 40% on electricity bills, Fuel for generators and even reduce emissions.

Aside from the reduction in cost for consumers, running an efficient system contributes to the overall reliability and efficiency of the power grid, as utility companies are able to reduce losses in lines and cost of maintenance while also experiencing a reduction in the number of transformers and similar support infrastructure required for their operations. Generally, an efficient system increases the potential of power generation, transmission and distribution systems and the lack of it may be one of the contributing factors to epileptic power supply/power shedding in some developing countries.

The first step to correcting the power factor is definitely determining the power factor for your load. This can be done by;

1. Calculating the reactive power using the reactance details of the load

2. Determining the real power being dissipated by the load and combining it with the apparent power to obtain the power factor.

3. The use of the power factor meter.

Power Factor Meter

With the power factor known you can then proceed to correct it, adjusting it as close as possible to 1.

The Recommended power factor by electricity supply companies, is usually between 0.8 and 1 and this can only be achieved if you are running an almost purely resistive load or the inductive reactance(load) in the system is equal to the capacitance reactance as they both will cancel each other out.

Due to the fact that the use of inductive loads is a more common cause for low power factor, especially in industrial settings (due to the use of heavy motors etc), one of the simplest methods of correcting the power factor is by canceling out the inductive reactance through the use of correction capacitor banks which introduce capacitive reactance in the system.

Power factor correction capacitors act as a reactive current generator, countering/offsetting the power being “wasted” by inductive loads. However, careful design consideration needs to be made when inserting these capacitors in setups to ensure smooth operation with equipment like variable speed drives and an effective balance with the cost.

Depending on the facility, and load distribution, the design could comprise of fixed value capacitors installed at inductive load points or automatic correction capacitor banks installed on the bus bars of distribution panels for a centralized correction which is usually more cost effective in large systems.

The use of power factor correction capacitors in setups has its downsides, especially when the right capacitors are not used or the system is not properly designed. The use of the capacitors could produce some brief period of “over-voltage”, when turned on, which could affect the proper functioning of equipment like variable speed drives, causing them to go off intermittently or blowing up the fuses on some of the capacitors. It could, however, be solved by trying to make adjustments to the switching control sequence, in the case of speed drives or eliminating harmonic currents in the case of fuses.

Mission Impossible: Unity Power Factor

As desirable as getting to the optimal power factor of 1 (unity power factor) is, it is almost impossible to attain due to the fact that no system is truly ideal. This is true in the sense that, no load is purely resistive, capacitive or inductive. Every load comprises of some reactive or resistive elements, no matter how small, as such, typical realizable power factor range is usually up to 0.9/0.95.

Power factor is a huge determinant of how well you are using energy and how much you pay in electricity bills( especially for industries). By extension, it is a major contributor to operational cost and could be that factor behind reduced profit margins, that you have not been paying attention to. Improving the power factor of your electrical system could help reduce electricity bills and ensure power is maximized.

Thanks for reading.
A copy of this article is also published on Circuit Digest along with several other articles from me. Read here.

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Emmanuel Odunlade

Hardware Design Engineer, All things ML, IoT & CV. Passionate about technology-based solutions that make the world better.