Since utility companies provide both the active
power and the reactive power to meet your needs they
charge you for both. To determine if you are paying
a charge for the reactive power you will need to
examine your bill. If you see readings with units
of kVAR or kVA you are likely paying a penalty if
your site power factor is low. Often the penalty
applies as soon as your power factor drops below 0.95.
Let's take a look at an example of a small
industrial
customer. The table above shows typical monthly
billing information we can use to calulate the
penalty imposed by the utility, and a cost analysis of
improving the site power factor to 0.95. We are
provided the site power factor, actual metered
demand (kW) and the adjusted billing demand (kW). Armed with this
information we can calculate the
amount of corrective kVAR needed to achieve a PF of
0.95 and eliminate the penalty. For this example
the kVAR calculation was performed elsewhere. Other
values were calculated as follows:
Bill
demand = Actual demand x (0.95 / PF)
Demand
charge = $4.25 / kW of Bill demand
Let's
review the month of January to make sure we
understand the table. We see the facility
operated with a PF of 0.74 and had an actual metered
demand of 228 kW. However, since the PF was below
0.95 the amount of billed demand is adjusted to 293
kW. The increased bill demand results in a $275
penalty. Finally, 132 kVAR is the amount needed to
correct the site PF to 0.95.
Now that we know the severity of the PF penalty,
and
the amount of kVAR needed to remedy the situation,
we can determine if it is a problem worth fixing. By restoring the
monthly PF to 0.95 we see that we
can eliminate $4,324 in annual utility charges. The
table shows that we need the maximum amount of
correction in July. By knowing that at least 211
kVAR is needed, and 220 kVAR is the closest
available capacitor bank rating, we can proceed with
our financial
analysis. The equipment and installation
costs will vary depending on the individual
application. In our example we will use a value of
$40 / kVAR.
Payback period = $ cost / $ savings
/ year
Payback period = ($40 x 220) /
$4,324
=2.03 years
Power factor correction
projects usually provide rapid paybacks, with many
less than 2 years.
