Explaining power factor correction

Facilities managers and business leaders are under growing pressure to cut energy costs, run operations more efficiently and extend the life of essential equipment. Every unit of wasted electricity adds unnecessary expense, reduces system capacity and increases carbon emissions. Most organisations know the value of upgrading lighting or optimising heating and cooling but one of the most overlooked causes of waste is something far less visible. That factor is the power factor.

When the power factor is poor your building draws more current than it should. This not only raises bills but also increases strain on your electrical system. The result is higher maintenance costs, avoidable penalties from utility providers and equipment that wears out long before it should. The good news is that there is a straightforward way to fix it. Power factor correction is a proven method that ensures your electricity works for you instead of against you.

In this blog post we explain what power factor correction is, how it works and why it is one of the most effective steps you can take to make your energy use more efficient.

What is power factor correction (PFC)?

Electricity is not just one single flow of power. It is made up of three parts.

Real power (kW) is the portion of energy that performs useful work such as lighting rooms, running motors or generating heat.

Reactive power (kVAR) is the portion that supports equipment by maintaining the magnetic fields needed for operation. While essential, it does not perform useful work.

Apparent power (kVA) is the combination of real and reactive power.

The power factor is the ratio of real power to apparent power. It is expressed as a number between 0 and 1. A power factor of 1 represents full efficiency, with every unit of electricity being used productively. A value below 1 shows that some energy is being wasted.

Power factor correction is the process of improving this ratio. It usually involves installing equipment, most commonly capacitors that reduce the demand for reactive power. This adjustment brings the power factor closer to unity and ensures the electricity consumed is used in the most effective way possible.

Types of power factor

The power factor does not always behave the same way. There are three main categories.

Lagging power factor
This occurs when the current falls behind the voltage. It is usually caused by inductive loads such as motors, pumps and fluorescent lighting. This is the most common scenario in commercial and industrial facilities.

Leading power factor
This occurs when the current runs ahead of the voltage. It is usually caused by capacitive loads such as long underground cables or capacitor banks. While less common, it can still create inefficiencies if not corrected.

Unity power factor
This is the ideal outcome, where the ratio is exactly 1 and all supplied power is converted into useful work.

How is power factor correction achieved?

The method chosen depends on the size of the facility, the type of load and budget. The most common approaches are:

Capacitor banks
These are the most widely used solution. They generate reactive power that balances inductive loads, helping to improve efficiency.

Automatic power factor correction panels (APFC panels)
These panels contain multiple capacitors and a controller. They automatically switch capacitors in or out depending on system demand. This is especially useful in facilities where demand varies throughout the day.

Synchronous condensers
Large rotating machines that provide reactive power support. These are typically used in heavy industry or power generation environments.

Static VAR generators (SVGs)
Modern electronic devices that respond quickly to changes in demand and provide highly accurate correction. They are often used in facilities with sensitive or fluctuating loads.

For most commercial properties, capacitor banks or APFC panels provide the most practical and cost-effective solution.

Why power factor correction is necessary

Correcting the power factor has a wide range of benefits for businesses. Here are five of the most important reasons to take action:

Lower energy bills
Many utility providers charge extra fees for poor power factor. Correcting it avoids these charges and reduces unnecessary consumption.

Greater system capacity
When the power factor is improved, the current drawn by the system decreases. This frees up capacity for cables and transformers, allowing additional equipment to be supported without costly infrastructure upgrades.

Reduced system losses
Lower current flow means less heat loss in cables and transformers. This improves efficiency across the entire electrical network.

Longer equipment life
Motors, cables and transformers operate under less stress when the power factor is improved. This reduces overheating, cuts breakdowns and extends asset lifespan.

Improved sustainability
By making better use of existing power, businesses reduce overall consumption and contribute to lower carbon emissions. This helps meet both internal sustainability goals and external reporting requirements.

How do you calculate power factor correction?

For many facilities the thought of calculating power factor correction can feel daunting. The reality is that it can be explained as a straightforward process.

Measure your current power factor
Use a power quality meter or review data from your utility provider.

Set a target power factor
Most businesses aim for 0.95 or higher.

Review your real power consumption
Check your energy bills or monitoring software to see how much useful power is being consumed.

Identify the level of reactive power
This is the part of the supply that is necessary but not productive.

Calculate how much needs to be corrected
The difference between your current and target power factor indicates the level of correction required.

Choose suitable equipment
Select a capacitor bank, APFC panel or other solution that provides the necessary level of correction.

For most organisations, these steps are completed by an energy consultant or engineer, who will recommend and install the right energy management solution. Power factor correction may not be as visible as upgrading lighting or modernising heating and cooling systems, yet it can have just as significant an impact. By improving how electricity is used, businesses can cut costs, improve reliability and reduce their environmental footprint.

Facilities managers and business leaders who act on power factor correction often find it is one of the most straightforward and cost-effective efficiency measures available.

Combined with powerful tools such as MRI Energy, organisations can protect budgets, extend equipment life and gain real time visibility to unlock long term value from their energy systems. To learn more, contact us today.

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