Power Factor Correction

For the Shop


Some consumers are billed for their energy on how much they receive rather than how much you use, which in most cases leaves an unused portion which is wasted. It’s a bit like having a pipe of electricity coming into the building and being billed on the size of the pipe rather than the energy flowing through it.

Power Factor Correction in effect reduces the size of the pipe to the minimum level thus reducing the energy cost.

Consumers who are billed by kVA or kW demand tariff will be affected by their Power Factor. You can tell by looking at the ‘unit code’ on your bill.


The amount of energy savings will be determined by understanding the existing Power Factor (explained in detail below) and the change gained by installing a Power Factor Correction device. There are many case studies available showing improvements in energy use of 15%-20%, which generated a payback period of under 3 years for the consumer.


Cost will always be a function of quality and service and we encourage consumers to seek a professional quote paying particular attention to the payback period (or return on investment). Power Factor Correction units are sized to match a business and thus will vary from place to place. Click here to obtain three free no obligation quotes matched specifically to your needs.


The availability of energy efficiency programs and/or incentives for Power Factor Correction may vary from state to state. For the latest information we recommend requesting a quote from a professional energy efficiency company.


Power factor is the relationship between Working Power and Reactive Power. Most loads are inductive and require an electromagnetic field to operate. Inductive loads require two kinds of power:

  • Working power: Performs the actual work in creating heat, light, motion, or whatever else is required. It is measured in kilowatts (kW)
  • Reactive power: Doesn’t do useful ‘work’ but rather sustains the electromagnetic field. It is measured in kilovolt-amperes-reactive (kVAr)

These two types of power combine to create the Apparent Power. It is measured in kilovolt-amperes (kVA).

These three types of power are related though the “Power Triangle” – illustrated below:


Simple trigonometry gives us the relationship between all three Powers.


What is Power Factor?

Power Factor is a measure of how effectively electrical power is being used in the conversion of current to work. The higher the Power Factor the more effectively electrical power is utilised. Conversely the lower the Power Factor the more ineffectively electrical power is utilised.

Power Factor is defined as the ratio of working power to apparent power.


For example, if the working power is 400 kW and the apparent power is 500 kVA, the Power Factor would be 0.8 which is a relatively poor Power Factor. The closer the Power Factor is to 1 the better.

How does Power Factor impact the Consumer?

A poor Power Factor indicates your operations are not optimising the usage of the electrical power being supplied to the premises. If your business is billed on a kVA demand tariff then your network charges will be higher than what they would be if you increased your Power Factor. If you’re billed on a kW demand tariff then improving your Power Factor will not have a financial benefit. You can tell if you’re billed on kVA or kW demand tariff by looking at the ‘unit code’ on your bill.

How can a low Power Factor be improved?

The simplest way to improve Power Factor is to install a Power Factor Correction unit at your site.
Power factor correction units consist of capacitors which act as reactive current generators. By providing the reactive power they reduce the total amount of power you must draw from the network.

For the same working power (kW) you can reduce the reactive power (kVAr) and the apparent power (kVA) as shown below: