The Importance of Power Factor Correction for SMEs

Power factor (PF) plays a pivotal role in the efficiency of electrical systems and therefore what SMEs end up paying on their energy bills. Understanding and correcting your PF is crucial for businesses looking to enhance their energy efficiency, reduce costs, and minimise their environmental impact.

In this article we explore what it is, why it matters, and how implementing corrections can benefit your operations.

What is Power Factor & Why You Should Care

PF is a measure of how effectively the electrical power is used to perform work. It is expressed as a ratio between the actual power (kilowatts, kW) that is used to perform work and the total power (kilovolt-amperes, kVA) that is drawn from the electrical system. A perfect score of 1.0 means that all the energy supplied by the source is being used effectively for productive work.

However, in many industrial settings, equipment such as motors, compressors, and transformers often operate at less than ideal power factors—typically around 0.8 or lower. This inefficiency leads to higher power consumption and increased charges on electricity bills because utilities must generate and transmit more power to achieve the same amount of useful work.

The Impact of Poor Power Factor

A low factor indicates that you’re not efficiently using the electrical power you draw from the grid, leading to several disadvantages:

• Increased Demand Charges: Utilities often charge higher rates for customers with lower PF to cover the cost of providing extra capacity.
• Reduced Electrical Capacity: A poor factor rating puts a heavier load on the electricity distribution network, reducing the capacity available for other users and potentially leading to voltage drops.
• Higher Energy Losses: Inefficient power usage results in greater losses in the form of heat, which not only wastes energy but can also shorten the lifespan of electrical components.

Taking Corrective Action

Factor correction involves adjusting the electrical systems to improve the ratio of working power to total power. This can be achieved by several means:

• Capacitors and Capacitor Banks: Installing capacitors in the electrical system helps to counteract the inductive effects of motor loads and reduces the phase difference between voltage and current, effectively raising the factor.
• Synchronous Condensers: Although more expensive, these devices act like capacitors but can be adjusted to provide variable improvement, making them suitable for facilities with fluctuating loads.
• Upgrading Equipment: Replacing older, inefficient motors and machinery with newer, high-efficiency models can also improve your PF as a side benefit.

SME Benefits of Good Power Factor

Improving your factor can yield substantial benefits for any business:

• Reduced Electricity Costs: Correcting things can lower your demand charges on your electricity bills, as a higher factor reduces the amount of power the utility needs to supply.
• Increased Capacity of Existing Electrical Systems: By improving your PF, less current is needed for the same amount of power, thereby reducing the load on your electrical systems and potentially extending their lifespan.
• Environmental Benefits: Efficient energy use means less power generation is required, which can contribute to reduced greenhouse gas emissions if the power is generated from fossil fuels. If you’re looking for a way to enhance your CSR practices – energy efficiency is certainly low hanging fruit!

PF Correction is a crucial yet often overlooked aspect of energy management. By understanding and improving equipment state, you can enhance your electrical system’s efficiency, reduce costs, and make a positive impact on the environment.

Whether through equipment / appliance replacement or installing corrective tech, the benefits of addressing issues certainly make a solid business case. We encourage SMEs to take stock of their current scenarios and are here to help.

If you want to take the first step, contact us for a free consultation and start making an impact on your bottom line through energy efficiency.