What is power factor correction?

MRI

Energy Management

May 22, 2025

Managing electricity usage efficiently is a priority for real estate businesses looking to control costs and operate sustainably. Power factor correction plays an important role in this, yet it’s often overlooked. It’s closely linked to how your building consumes and distributes electricity, and understanding it can help improve your energy performance.

At MRI Software, we provide innovative software solutions for real estate businesses to thrive. To explore related concepts, you may also want to read about energy flexibility and the benefits of energy management software, both of which can contribute to smarter building operations.

Contents:

Understanding power factor
How it works
Why is it important?
What are the key benefits?
What are the types of power factor correction?
FAQs

Understanding power factor

Before diving into the details, it helps to understand the concept of ‘power factor’. In any electrical system, power is made up of two components:

Real Power (kW): The energy used to perform actual work, such as running lights, heating, or motors
Reactive Power (kVAR): The energy used to maintain voltage levels and support inductive loads like air conditioning systems, pumps, and elevators

Combined, these make up Apparent Power. Power factor is the ratio of Real Power to Apparent Power, and it’s measured on a scale from 0 to 1. A power factor of 1 means all the power is being used effectively.

When the power factor is low, your systems are using more electricity than necessary. Power factor correction improves this ratio, typically by using capacitors to counteract the effects of inductive loads. The result is more efficient electricity usage and a noticeable reduction in waste.

How it works

Power factor correction involves the installation of devices that help bring your building’s power factor closer to 1. The most common method is the use of capacitors that are either built into equipment or added to your building’s electrical system. Capacitors work by storing energy and releasing it when needed, which helps to balance the lag caused by inductive loads.

When installed correctly, these devices reduce the amount of Reactive Power needed, allowing your equipment to function using less overall electricity. That translates to reduced demand from the grid, lower operational costs, and less strain on your infrastructure.

Why is it important?

When the power factor is not optimised, your system pulls more current than necessary. This can increase wear and tear, lead to energy waste, and result in extra charges from your electricity provider. Over time, it can also impact the longevity of your electrical assets.

Power factor correction isn’t just about saving money. It also supports the overall stability of your electrical system. When equipment operates more efficiently, you can expect fewer disruptions, smoother operations, and better long-term performance.

What are the key benefits?

Power factor correction can have a significant impact on your operational and financial outcomes. Some of the main benefits include:

Lower electricity bills: Reducing wasted Reactive Power leads to lower energy consumption and less demand on your system.
Avoidance of penalty charges: Many electricity providers charge penalties for poor power factor. Correction helps eliminate those fees.
Improved equipment lifespan: When systems are operating efficiently, they’re under less stress, which can lead to fewer breakdowns and repairs.
Reduced load on electrical infrastructure: Minimising current draw eases pressure on transformers, cabling, and switchgears.
Better energy performance: Accurate control of electricity usage can support broader energy goals and reduce your carbon footprint.

With energy management software, you can track your building’s power factor in real time. This visibility helps you maintain performance and identify any issues before they become costly.

What are the types of power factor correction?

Power factor correction solutions are generally classified into two types:

Passive power factor correction

This method uses fixed electrical components, such as capacitors or inductors, that are installed either in parallel or in series with your equipment. Passive systems are relatively simple and cost-effective but are best suited for predictable, steady loads.

Active power factor correction

This approach uses electronic circuits to continuously monitor and adjust the power factor. It is ideal for environments where loads fluctuate significantly, such as in buildings with variable-speed drives or dynamic energy demands. Active correction provides more precise control but may come at a higher upfront cost.

The best solution depends on your building’s size, load profile, and the complexity of your electrical system. A thorough energy audit can help determine the most suitable approach.

FAQs