What are the costs associated with a low power factor?

We get asked all types of questions about Power Factor and Power Factor Correction that cover the spectrum of Who, Why, Where, When, etc. Another such question is: “What are the costs associated with a low Power Factor rating?”

Most, not all, commercial electric statements include a Power Factor number measured by the utility.  This number will either be represented as a percentage or decimal.  A perfect Power Factor (or “unity”) is 100% or 1.0.  A rating for a low Power Factor begins at 95% (or 0.95).

There are two main cost categories associated with a low power factor:

  • Direct financial costs:
    • Utility penalties: This is the most common and direct cost. Many utility companies charge a surcharge on your electricity bill if your power factor falls below a certain threshold (typically around 0.95). These penalties are variable and can be significant, with some businesses incurring charges as high as $15,000 or more per month.
  • Indirect costs:
    • Increased energy consumption: Even without a direct penalty, a low power factor means your equipment is using more electricity than necessary to perform the same amount of work. This translates to higher overall electricity bills.
    • Reduced equipment lifespan: Low power factor can lead to overheating of motors, transformers, and other electrical components. This increased stress can shorten their lifespan and lead to more frequent repairs or replacements.

Even if your entire facility is “high efficiency… everything”- your overall Power Factor ratings can be low. This is especially true any time new equipment or facility expansion is introduced to an already-operating system.

Energy Efficiency Group can help you determine if your company is operating at peak efficiency, as well as paying vs not paying penalties.

If you suspect a low power factor might be an issue, don’t hesitate!  Contact Energy Efficiency Group to begin the conversation. 

 

About Energy Efficiency Group:
Energy Efficiency Group is a Power Factor Correction company based in Cincinnati, Ohio. Though we are based in Cincinnati, we have a national (and limited international) reach. We partner with manufacturing, industrial, warehouse, offices, schools, processing facilities, as well as hotels, resorts, theme parks, zoos, etc. Any facility with that features “a lot of moving parts” is a potential candidate to focus on sustainability efforts.  Even if your facility installed 100% energy efficient components- most of these are not manufactured by the same companies and not designed to “work together.” Meanwhile, they may be energy efficient on their own, as a whole they may be working against each other causing inefficiencies. Energy Efficiency Group is partnered with Indianapolis-based Global Energy Solutions Group (GESG) which holds multiple US patents on Power Factor Correction equipment. 

 

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