Utility suppliers need to provide enough electricity to service all energy users on an electric grid. In order to maintain grid reliability for its clients, the electric utility company uses a number of calculations–based on a variety of factors to determine your monthly utility costs. One important measurement is the ratio of true power (the power that is actually being used) measured in kilowatts (kW), over the apparent power (the power generated in an electrical circuit) measured in kilovolt amperes (kVA). This calculation is known as the power factor (PF). A facility is performing at its best when its PF ratio is between 90% and 100%. If a facility is using power inefficiently, it will have a lower PF. The lower the PF, the less efficient the power usage, and the higher the utility bill.
To use electrical power efficiently, a facility should draw mostly true power. When a facility has a low PF, this can cause voltage fluctuations and power quality issues for neighboring facilities on the grid. That is why an electric supplier applies a surcharge to a user’s monthly utility bill based on its PF. The surcharge helps the supplier offset the cost of supplying reactive power to a user, which is not included in other charges on their utility bill.
Large commercial and industrial energy users are especially at risk of a low or fluctuating PF which will often result in costly, monthly surcharges. The ratio of true power over apparent power can lower a PF when the initial electricity required to start a facility’s large systems–whether operating heating and cooling systems, running industrial compressors for snowmaking, or powering a manufacturing line–exceeds the amount of electricity that is actually required to keep the systems running.
Understanding your facility’s energy usage and power factor can be confusing and costly if you aren’t sure what to look for when assessing your utility bills or how to raise your power factor. When Premier Power Solutions recently reviewed a client’s utility bills, our attention was immediately drawn to the kVA–which was greater than the kW on several utility bills–which lowered the power factor. Since our client had recently optimized their building systems, we advised them to install capacitors on some of their equipment in order to raise their PF. In accumulating and holding electricity, the client’s capacitors increased their system’s carrying capacity, which raised the kW power factor and reduced the kVA demand. As a result, the client was able to increase their kW load without affecting the kVA. Their PF increased as the kW demand increased over kVA demand. This meant that the utility began calculating demand charges on the kW rather than the kVA. By understanding and altering their PF, the client quickly saw improvements in energy efficiency and their electricity costs.
If you’re not sure whether your facility’s demand is being billed based on kW or kVA, or how to determine and improve your PF, our team of analysts can help. Click here to request a utility bill review.