# Energy management can be a complex and confusing topic. Learning about load factor and power factor can give you a better understanding of energy management and help you make decisions to save your business money.

## What is load factor?

Load factor is the actual amount of kilowatt-hours (kWh) delivered on a system in a designated period of time, as opposed to the total possible kWh that could be delivered on a system in a designated period of time.

For example, assume that an office building uses a total of 10,000 kWh during a 30-day (720 hours) billing period and has a peak load of 25 kW during that time. The building’s load factor for that billing period is 0.56, or 56 percent.

Using the same formula, a facility can also determine their annual load factor. Theoretically, if a company is able to shift operations so that their usage is constant and no peaks or valleys exist, it could achieve a load factor of 100 percent.

## Why does load factor matter?

Increasing your load factor will reduce the average unit cost of the kWh. In many situations, improving load factor could help companies save a considerable amount of money.

## How can we increase load factor at our business?

Many organizations can improve load factor by reducing demand or increasing production efficiency. Distributing loads over different times or installing energy management systems can often help. Lowering peak demand along with keeping demand stable is often a cost-effective way to maximize the use of your power.

## What is power factor?

Power factor is a measure of how effectively you are using electricity. Various types of power are at work to provide us with electrical energy. The following is a summary of various types of power and power factor.

**Working Power** is expressed as kilowatts (kW) and is the “true”or“real” power used by all electrical appliances to perform the work of heating, lighting, moving, etc. Resistive loads are loads that use true or real power. Common resistive loads include electric heating and lighting.

**Reactive Power** is an inductive load, such as a motor, compressor or ballast that requires reactive power to generate and sustain a magnetic field needed to operate. Reactive power is often referred to as non-working power and expressed as kilovolt-amperes-reactive (kVAR).

**Apparent Power** is the ratio between working power and reactive power. Every home and business has both resistive and inductive loads. The ratio between these two types of loads becomes important as more inductive equipment is added. Apparent power is called kilovolt-amperes (KVA) and determined using the formula kVA2 = kV*A.

**Power Factor** is the ratio of working power to apparent power, or kW / kVA. For example, an operation runs at 100 kW (working power) and the apparent power meter records 125 kVA. Dividing 100 kW by 125 kVA yields a power factor of 80 percent, meaning only 80 percent of incoming power does useful work.

A high power factor benefits both the member and Dakota Electric, while a low power factor indicates poor utilization of electrical power. Dakota Electric must supply the total kVA needs of all members, meaning the higher the power factor is, the more efficient our distribution system operates. Improving the power factor can maximize currents-carrying capacity, improve voltage to equipment, reduce power losses and lower electric bills for members with a current power factor less than 90 percent.

Under ideal conditions, current and voltage are “in phase” and the power factor is 100 percent. If inductive loads such as motors are present, power factors less than 100 percent, typically 80-90 percent, can occur. Low power factor causes heavier current to flow through power distribution lines to deliver the required kW to an electrical load.

## Effects of Low Power Factor

- Extra current can overload the power distribution system in a building or between buildings.
- Electrical costs are increased and may result in additional fees for members with a power factor less than 90 percent.

Dakota Electric measures generating and power distribution systems’ capacity in kilovolt amps (KVA) using the following formula:

KVA = volts (line to ground) X amps X 3 (three-phase system) / 1,000

For example, if you have a 277/480 volt service that is a 1,000 amps, you will have an 831 KVA. (277 volts X 1,000 amps X 3 / 1,000 = 831 KVA)

With a 100-percent load factor, it would take 2,000 KVA of generating and distribution network capacity to deliver 2,000 kW. However, if the power factor dropped to 85 percent, 2,353 KVA of capacity would be needed, illustrating low power factor has an adverse effect on generating and distribution capacity.

## Correcting Low Power Factor

Dakota Electric monitors members with loads greater than 100 kW in order to ensure their power factor is above 90 percent. Members with a power factor less than 90 percent may pay an additional fee, usually in the form of demand charges assessed each month.

If you own a large building, consider correcting poor power factor for the following reasons:

- Reduce power factor charges from Dakota Electric.
- Restore the capacity of overloaded circuits in your building or complex.
- Help maintain proper voltage levels on your system.

## Capacitor Banks

The simplest way to improve power factor is to add power factor correction capacitors to the electrical system. Power factor correction capacitors act as reactive current generators and improve power factor by helping offset the non-working power used by inductive loads. The KVAR rating of a capacitor shows how much reactive power cancels out the reactive power caused by inductance, each KVAR of capacitance decreases the net reactive power demand by the same amount.

Capacitors can be installed at any point in the electrical system. However, capacitors are usually added at each piece of offending equipment and switched on and off with the equipment or installed ahead of groups of motors, ahead of motor control centers and distribution panels or at main services. Capacitors will improve the power factor between the point of application and the power source, but leave the power factor between the load and the capacitor unchanged.

Power factor correction capacitors can switch on every day when the inductive equipment starts. Switching a capacitor on can produce a very brief “over-voltage” condition. If problems occur with variable speed drives turning themselves off due to “over-voltage” at approximately the same time every day, an issue may exist with the switching control sequence. If fuses blow on some, but not all capacitors, harmonic currents may be the cause.

The interaction between power factor capacitors and specialized equipment, such as variable speed drives, requires a well-designed system. Too much capacity can cause problems, making sizing capacitors important.

## Switched Capacitors

Plants equipped with very large, intermittent inductive loads, such as large motors or compressors, may require switched capacitors, which are capacitors connected to individual or groups of motors. Switched capacitors are only in action when the motor load is turned on or capacitors may be switched on and off depending on system power factor. The switching feature is only required for large capacitors that cause an undesirable leading power factor when turned off.

There are many ways to correct low power factor, and Dakota Electric welcomes the opportunity to provide a PF review and savings estimate for any particular application.