Power Factor (pF) – What is It?


The pF is usually defined as the ratio of the real power flowing to the load to the apparent power in an AC electrical circuit, or you could say that pF is the cosine of the phase angle between current and source voltage.

To put that a little simpler: pF represents the fraction of total power (apparent power) which is utilised to do the useful work called active power. It provides a measure of how efficiently a load current is being converted into useful work output. Essentially, this is an indication of the overall efficiency of a supply system.

pF ranges from 0 to 1 and the formula for calculating the pF is as follows:


If we estimate that a site has a pF of 0.85, this would mean that only 85% of the site’s power is being used to do useful work. A pF of 1.00 represents unity, meaning that 100% of the power coming into the site is being used for useful work.

Take any site that has industrial processes using electric motors (pumps, fans, conveyors, refrigeration, etc.), you can be sure that the motor will introduce inefficiencies into the electrical supply by drawing additional currents. What this means is that you are demanding more power from the grid than you actually need.

The lower your pF, the more you need to draw from the grid, and if steps are not taken to improve the pF of the load, all of the equipment from the power stations to the installation sub-circuit wiring has to be larger than necessary. This would result in higher capital expenditures and thus higher transmission and distribution losses throughout the entire grid. For this reason, suppliers and distribution operators include charges on your invoice to cover for such instances.

If you look at your electricity invoice for half hourly meters, you will notice that you have a Set Capacity Charge or Supply Capacity Charge, which is expressed in kVA. This is a charge you are paying to the grid to have the available capacity to meet your peak demand regardless of when it occurs. Why is this important? Well, if you observe how the Set Capacity (kVA) is calculated you will notice a direct link between this charge and your pF:


You may see other charges on your invoice as well depending on how low your pF is. Suppliers will charge you a Reactive Power Charge if your pF drops below 0.95. It can also cause you to see Excess Capacity Charges on your invoice. Let us observe that in the form of an example:


  • Your site has a Set Capacity of 475 kVA
  • Your Maximum Demand for the month was 450 kVA
    1. Your pF is 0.95
    2. Your pF is 0.80
  • Your Set Capacity Charge is £1.72/kVA/Month.


As you can see, in this example since our pF is 0.95 our kVA during our Maximum Demand was 474 kVA meaning we only pay for our Set Capacity of 475 kVA totalling £817 for the month.




As our pF deteriorates, we are faced with Excess Capacity and our total for the month is £1,011.36 + Reactive Power Charges.


This is how the pF influences both our consumption and total charges. Simply put, the lower your pF, the bigger the chances are of penalty charges appearing on your invoice.

There are also other factors aside from direct cost. You may have indirect costs of a low pF through loss in efficiency of the equipment used. The amount of useful power inside the installation is considerably reduced and reactive power is drawn, causing equipment to generate more heat, which induces stress on the equipment and can lower the lifespan of said equipment.

Thus by improving your pF you can benefit from:

  • Reduced electricity cost
    • Eliminating excess capacity and reactive power charges.
  • Increased system capacity
    • You can add additional loads increasing your MD without overloading the system.
  • Improve system operation (gain voltage)
    • Excessive voltage drops (through low pF) can make motors more sluggish, causing them to overheat. Drops in voltage also interfere with lighting and proper application of motor controls and electrical instruments.
  • Improve system operation (reduce line losses)
    • Relieving the system of transmitting reactive current means lower losses in the distribution system of the site, meaning fewer kWhs are used resulting in consumption savings.

You can influence your pF by means of pF correction. This can be done in two ways:

  1. Reducing the amount of reactive energy by means of eliminating unloaded motors and transformers as well as avoiding supplying equipment with voltage in excess of the rated voltage.
  2. Compensating artificially for the consumption of reactive energy by means of pF capacitors. These capacitors are installed at the starter or applied at the switchboard or distribution panel. What they do is essentially correct the pF to avoid it dropping below 0.95.

In conclusion, it is important to keep an eye out on all charges on your invoice and optimise the ones you can directly influence. pF is such a charge where small changes can make an impact and result in savings for your company.


Samer Muratovic

Samer (Sam) was the Bureau Services Manager at Alfa Energy. He is an MBA graduate who has been working in the energy industry for the past five years. He has worked in Sales, various supporting roles, and finally Operations before taking on a role in Bureau Services specialising in Energy Data Management, Optimisation, and new product development. He is currently in charge of teams covering North America, SEE, the EU, and the UK market which service all post-sales deliverables to clients across all market segments.