What Does Power Factor Really Affect? Let's Talk About Your Electricity Bill.

In power systems, Power Factor (PF) is often seen as just a technical term. But for factories, data centers, and other industrial users, a low power factor can directly translate to higher electricity bills, lower equipment efficiency, and even penalties from the utility.

So what exactly is power factor? How does it impact your energy cost? And how can you improve it effectively? Let’s break it down.

What Is Power Factor?

Power Factor = Active Power ÷ Apparent Power

• Active Power (kW): The actual energy consumed to perform useful work, such as rotating motors or lighting.

• Reactive Power (kVar): Energy used to create magnetic and electric fields—essential for inductive equipment like motors and transformers.

• Apparent Power (kVA): The total power that must be supplied by the grid.

A low power factor means your facility requires more total capacity (kVA) to deliver the same useful output (kW), leading to inefficiency.

How Does Power Factor Impact Your Facility?

1. Increased Electricity Bills Due to Penalties

In many regions or countries, utility companies impose power factor penalties if your PF falls below a certain threshold (commonly 0.9). These are known as power factor surcharge fees or reactive power charges.

For example:
A manufacturing plant with an average PF of 0.75 may incur an extra $1,200 per month in penalty charges.

2. Reduced Transformer and System Capacity

A lower PF increases your apparent power demand, reducing the usable capacity of transformers and cables, and potentially leading to overloading and voltage instability.

3. Shortened Equipment Life and Higher Maintenance

Operating with a poor power factor leads to higher current flow, causing more heat in cables and equipment, resulting in faster degradation and more frequent failures.

How to Improve Power Factor?

• Install Low-Voltage Capacitor Banks

A common and cost-effective method to compensate for inductive loads in factories, commercial buildings, and offices.

• Use Active Devices like SVG or AHF

For fluctuating loads or environments with high harmonic distortion, traditional capacitors may not work well. In these cases, a Static Var Generator (SVG) or Active Harmonic Filter (AHF) offers fast, accurate compensation.

• Adopt a Hybrid Compensation System (SVG + TSC)

For dynamic, high-power systems like paper mills or automated production lines, combining SVG with Thyristor-Switched Capacitors (TSC) offers both cost-efficiency and high responsiveness.

How YT Electric Helps You Improve Power Factor

At YT Electric, we provide a full range of power quality solutions:

• Fixed capacitor banks

• Intelligent reactive power compensation cabinets (TSC)

• SVGs and AHFs

• Hybrid systems (SVG + TSC)

• On-site load analysis and tailored design services

From system design to commissioning, we help ensure your power factor meets standards, reduces penalty fees, and enhances system stability.

Power factor isn’t just a number—it directly affects your bottom line and your system’s reliability. With the right compensation solution, you can cut unnecessary costs, extend equipment life, and maximize energy efficiency.

YT Electric Helps One Successful Case of Improving Power Quality in an Industrial Environment

Contact us for expert guidance:

For more information on how our Active Harmonic Filter and Static Var Generator improve power quality: sales@ytelect.com