Tap dripping - for power factor leaking analogy

You may have heard that a low power factor can increase the costs of your bills. This alone is reason enough to want to know more about what it is, how your business measures up and what you can do to go about improving it. Let’s start with what it is.

Understanding Power Factor

In buildings today, energy can be used in two ways. Firstly, there’s the power that is used in equipment (heating, lighting, driving motors), this is known as real power. A site may also draw power which is not directly used, known as reactive power. The combination of these two is called apparent (or total) power.

Think of it in terms of a water bill – you use water for showering, doing the dishes, watering the plants. This is the ‘real’ water consumption. If you have a few leaks around the house – your tap in kitchen sink is dripping and you’ve burst a pipe in the automatic watering system, this is your ‘reactive’ water consumption. The combination of the two would be ‘apparent’ (or total) water consumed.

If you have many leaks, your water bill will be much higher than it should be – you’re paying for water that you don’t actually need. In a similar fashion, if your site has a poor power factor, you could be paying for energy that cannot be used.

Bucket of water - representing power factor analogy

What is a low Power Factor?

Power Factor is simply the measure of the efficiency of the power being used. Its calculation uses the relationship between real and apparent power (kVA). It describes how efficiently energy is used on a site and is scored from 0 - 1.
A score of 1 means that 100% of the power consumed on the site is used by equipment and appliances. A score of 0 means that 0% of the power consumed is used by equipment – to use the water analogy, it’s all leaks!
So, if you have a high power factor, it means the site has a high efficiency at utilising the supplied power. But what’s it meant to be?

Under the Australian Distribution Code in Victoria, electricity consumers in Victoria can be required to maintain a power factor of at least 0.75 (see table for values).

Power Factor and Your Electricity Bill

Power Factor can have a significant impact on your power bill. A low power factor can prove costly, especially for facilities engaged in manufacturing that uses a lot of machinery. Ergon Energy breaks it down nicely! 

'A business with a low power factor may result in higher capital expenditures and operating costs for the electricity supply company, compared to a similar business with a high power factor. And these higher costs usually have to be passed on to all customers in the form of higher tariff rates.

There are a variety of reasons that a site may have poor power factor some of the main causes include:

  • Inductive loads such as transformers
  • AC motors
  • Welding equipment
  • Arc furnaces and fluorescent lighting'

- Ergon Energy

For household owners or facility owners, determining the state of your Power Factor is not an easy task. This is where technology comes.

How to measure your power factor

There are a variety of ways to measure your power factor:

  • Energy management systems (like carbonTRACK)
  • Logging devices on equipment
  • Individual circuit measurements 
  • Consulting your energy retailer (not always effective)

Once you have the knowledge that your power factor is low you can take actions to improve it. If you're not qualified to assess or take action on your power factor, employing a specialist may be the best way to go. A member of the carbonTRACK Team may be able to help you with discussing how an energy management system can help you correct power factor for your business.

Tackling Power Factor Correction

There are many energy efficiency companies that offer Power Factor Services. Power factor correction service providers often do the following:

  • Identify the amount of savings that can be achieved through power factor correction
  • Suggest appropriate power factor solutions to achieve an improved power factor
  • Monitor power factor improvements and its impact moving forward

The benefits of correcting power factor can be found on OZ Wide Power and include:

  • 'Reduced cost: Reduction in kVA demand and therefore electricity costs.
  • Equipment life: Extend the life of your equipment.
  • Compliance: Compliance with regulatory codes.
  • Expansion: More power available for site expansion without the need for new switchboards and cable.'

- Oz Wide Power

By improving your Power Factor you minimise wasted energy, improve the efficiency of your site, free up more kW from the network, and save money!


Start monitoring your power factor with carbonTRACK. Let us know you’re interested.

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