Poor Power Factor Costs Money

One of the significant areas of concern of electricity network operators worldwide is lack of transmission capacity and many areas of New Zealand are no different.  Although there have been significant investments in recent times in transmission infrastructure it is an ongoing issue. 

One of the causes of increased loading on electrical equipment is poor power factor, put simply, power factor is a measure of the effectiveness of the power being supplied to your building, if your power factor is low, then the electrical supply equipment required to for your premises must be larger than required.

As a result many of New Zealand's electricity network companies have charges that reflect the costs of supply to those sites with poor power factor, whether it's through demand charges (kVA), reactive charges (kVAr) or direct poor power factor penalties, it costs money.

As an example, Vector implemented their 2nd stage pricing for poor power factor penalties on 1st April 2013. The rate increased from 0.0011$/kVAr/day to 0.0731$/kVAr/day which was an increase of ~6,600%! What may have previously been a penalty amounting to about ~$20/month became ~$1,440/month from 1 April 2013. Vector have been signalling a further significant increase of around 400% from 1 April 2014 which would mean in this example the penalty would increase to $5,760 per month. At these price levels correcting poor power factor is a sound economical decision even if it requires the installation of a completely new unit.

If you're one of the smart ones who've already installed an automatic power factor correction unit, that's great; problem solved, or is it? We have found several instances where equipment has been installed incorrectly and has never worked properly. It is more common than you would think. Also what if you install more motors, bigger motors or more lights? What if one of the capacitor banks fails, or a fuse blows? What if the controller stops working? One common cause of premature capacitor failure is the presence of Harmonic Distortion of the supply voltage, the presence of this distortion is becoming more prevalent each year as more and more electronic equipment is installed such as computer power supplies and electronic lighting ballasts.

Bottom line is that things change. It's inevitable that your load will change and believe it or not, capacitors degrade and contactors wear out. They're not "set and forget" and as such we recommend carrying out annual checks on your power factor correction equipment.

Annual checks should include recording capacitor reactive current so that the capacitance value can be determined. Through doing this regular maintenance (and measurement recording), you can then determine if part of your equipment is about to fail and needs preventative maintenance, or has become ineffective due to load changes. This should also include spot checks for harmonic voltage distortion of the electrical supply.

Forgetting about the technical stuff, if you have a power factor below 0.95, somehow, somewhere it's costing your business money. One way to check is to look at your power bill.

If you have a Non-TOU meter then you are OK (Power factor and Demand can only be calculated if you have a TOU meter). On a TOU bill the network charges are broken down into different elements. If they contain something called "Power factor penalty", or "Reactive charges", then you are getting charged penalty fees for poor power factor directly. If you are paying a "Demand" charge based on kVA, the Demand value will be higher if you have a low power factor - although the exact penalty is hidden amongst the overall demand charges.

Because it can be difficult to determine exactly what our poor power factor is costing your business,  Smart Power are offering to carry out a free invoice check to determine this for you. Simply send us a current invoice and we can let you know whether you are affected or not.

NB: some Retailers will identify what your average Power Factor at the site is - please be aware that whilst this is a good guide, it is not definitive as it is an average. You could still be paying for poor Power Factor if it is bad at peak times during the day.

If you already have power factor equipment then Smart Power can complete a check to ensure it is all working effectively - we recommend getting these checks done annually and can discuss a regular maintenance plan with you.

If you do not have any power factor correction equipment, or not enough, Smart Power can also carry out a full power factor investigation of your site, including harmonic analysis, health checks of existing equipment, sizing and specification of required equipment, payback calculations and project manage the entire process if required.

If you would like to hear more about how Smart Power and Energy Select can assist you with analysis of your Power Factor please contact your Account Manager; alternatively you can contact Bruce direct on 09 534 9644 or bruce.stubbing@smartpower.co.nz and he can provide you with more information.