Power Factor 101

What is Power Factor?
It is the percentage of electricity that's delivered to your business or home and used effectively, compared to what is wasted. In an electric power system, a load with low power factor draws more current than a load with a high power factor for the same amount of useful power transferred. The higher currents increase the energy lost in the distribution system, and require larger wires and other equipment. Because of the costs of larger equipment and wasted energy, electrical utilities will usually charge a higher cost to industrial or commercial customers where there is a low power factor.
 
Cause of Low Power Factor
Low power factor is caused by inductive loads (such as transformers, electric motors, and high-intensity discharge lighting), which are a major portion of the power consumed in industrial complexes. Unlike resistive loads that create heat by consuming kilowatts, inductive loads require the current to create a magnetic field, and the magnetic field produces the desired work.

The total or apparent power required by an inductive device is a composite of the following: Real power (measured in kilowatts, kW) Reactive power, the nonworking power caused by the magnetizing current, required to operate the device (measured in kilovars, kVAR). 

Reactive power required by inductive loads increases the amount of apparent power (measured in kilovolt amps, kVA) in your distribution system. The increase in reactive and apparent power causes the power factor to decrease.

Why Improve Power Factor?
Some of the benefits of improving your power factor are:
Your utility bill will be lower.  Low power factor requires an increase in the electric utility's generation and transmission capacity to handle the reactive power component caused by inductive loads. Utilities usually charge a penalty fee to customers with power factors less than 0.95.

You can avoid this additional fee by increasing your power factor.  Your electrical system's branch capacity will increase. Uncorrected power factor will cause power losses in your distribution system. You may experience voltage drops as power losses increase. Excessive voltage drops can cause overheating and premature failure of motors and other inductive equipment.