Ensuring your business’ electrical equipment has a good power factor will reduce your energy consumption and help prevent electrical damage. This article explains everything you need to know about power factor and power factor correction.
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What is a power factor?
A power factor is an electrical engineering term used to describe how efficiently electrical power is used in the workplace. It represents the ratio of the energy required to efficiently power a machine, or complete electrical installation, to the total power actually used, which includes electricity wasted through processes such as heat generation.
How do you calculate a power factor?
The actual power, or working power, the electrical equipment uses to perform useful work is measured in kilowatt-hour (kW). While the total energy actually used, called apparent power, is measured in kilovolt-amperes (kVA). Calculating the power factor ratio of a system requires only simple division: kW / kVA
For example, if a workshop has machinery that requires 100kW to run, but is measured using 125 kVA, the power factor = 100 / 125 = 0.8.
In a perfect system, a machine that requires 100kW to run would use 100kVA, which is a power factor of 1 (100kW / 100kVA).
So, using our above example, if the machinery has a power factor of only 0.8, it’s only 80% efficient.
What are the benefits of a good power factor
Increasing your power factor will do more than lower your power bills. Some other benefits include:
- Regulatory compliance: many energy distributors have a minimum power factor requirement of 0.95. Keeping on top of your power factor means you avoid possible penalties.
- Improved equipment life: a higher voltage resulting from a poor power factor may damage your equipment.
- Demand charges: if you’re a business that uses a lot of electricity and are on a KVA demand tariff, which charges you for your total power usage, a good power factor will mean lower demand charges and, savings on your bill.
- Increased capacity: by reducing energy wastage, you’ll free up capacity that can be used to power other high power-usage equipment.
- Lower carbon emissions: by reducing your business’ electricity wastage, you’ll lower its carbon footprint.
What is power factor correction
Power factor correction (PFC) is the term given to the technology used to improve a low power factor. PFC may be required if your power factor slips below 0.9. Failing to correct a poor power factor won’t just lead to higher power bills, it may also significantly damage sensitive electrical components in equipment and machinery.
Of course, it’s a good idea to ensure that your power factor never becomes problematic. You can do this by checking the power factor of appliances before you buy them, and ensuring your electrical equipment is calibrated to the right voltage.
Finding the best price for power?
When comparing power companies, it’s important to consider the broader picture – don’t become too focused on finding a deal with a big prompt payment discount or special perk. Be sure to balance all the rates, discounts, fees and contract periods when making a decision, as well as more personal factors, such as customer service and support.
To help you find the best value electricity retailer, Canstar Blue rates NZ power companies for customer satisfaction and value for money, see the table below for some of the results, or you can click on the button below for the full results of our survey.
Canstar Blue’s latest review of NZ power companies compares them on customer satisfaction. The table below is an abridged version of our full results, available here.
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Canstar Blue NZ Research finalised in April 2023, published in June 2023.
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About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.
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