With the increased competition created by deregulation, distribution companies have been forced to find ways to maintain profits while offering competitive prices. One method energy providers have begun to employ is assessing penalty fees for low power factor (PF). You don't have to just accept these charges, though. Employing PF correction devices is your best bet, but you need to be aware of a few things before taking that step. The purpose of correction devices — usually capacitors — is to bring your power factor closer to unity, and manufacturers' claims of added benefits like energy savings are often inflated or misleading. And just as these devices are designed to improve power factor, they can also create power quality problems.

**Determining the PF correction needs of plant loads.** Before investing in correction devices, you'll first need to know the PF of your facility. The Table above will help you determine a rough estimate. The summary of typical PF levels for various industrial loads will give you a general idea of how much PF correction you may need, but monitoring at the service entrance and on circuits with a potentially poor PF will help you to better identify your facility's requirements. It will also allow you to target the locations that could benefit the most from the PF correction.

**Fig. 1** illustrates an approach for characterizing the reactive power requirements on individual circuits and determining the total facility load. You should take measurements for at least several demand intervals at typical load. You can extend the metering farther out into the plant to achieve the desired level of detail as time and your budget allows. It's usually sufficient to meter just the major feeds within the plant.

**Calculating PF correction requirements to reduce electric bills.** The PF used in billing is generally an average figure for the entire month, although a few utilities will determine PF on a quarterly basis. The typical procedure for determining the PF is to measure the kilovarhours (kVARh) as well as the kilowatthours (kWh). This is usually done with two separate induction disk-type meters or with an electronic meter. The kVARh and the kWh are then combined, using the following equation, to obtain an equivalent kilovoltamperehours (kVAh):

The average PF is the ratio of kilowatthours to kilovoltamperehours, or

PF = kWh/kVAh

Based on the loads in your system and some information on your utility bill, you can calculate the necessary amount of capacitance to raise your power factor to an acceptable level. Review at least a year's worth of your bills to characterize seasonal variations and long-term trends in your loading. The key data are maximum demand, power factor, typical energy usage, and power factor penalty or demand charge.

Industrial end-user electric bills are usually split into energy charges and demand charges. Utilities typically determine the energy charge by multiplying the number of kWh of energy consumed in the month by the energy rate ($/kWh).

The demand charge is more complicated. It's typically based on the peak kW demand over a given 15-min, 30-min, or 60-min interval during the month, which is nominally multiplied by the demand charge rate ($/kW).

Penalties for low PF — typically anything less than .95 — have become increasingly common. Most utilities use one of the following two common formulas for determining the billed demand when PF is lower than 0.95 lagging:

KW_{Billed} = kW_{Actual} x (0.95/PF)

or

KW_{Billed} = kW_{Actual} x (1 + 0.95 - PF)

Both of these formulas are applied only when PF is less than .95 lagging. Otherwise, the billed demand is the same as the actual demand.

The difference between the amount paid for the billed demand and the amount that would be paid for the actual demand is often termed the PF penalty. This quantity, calculated using the following formula, is generally responsible for the bulk of the justification for PF correction:

Penalty = (kW_{Billed} - kW_{Actual}) x $/kW

Regardless of the cost of the penalty that appears on your bill, you can eliminate it completely with the addition of PF correction devices. Calculate the amount of PF correction necessary to negate any PF penalties. You can evaluate the cost effectiveness by comparing the price of PF correction with the savings in PF penalties over the period of a year or more.

**Location, location, location.** Once you've decided whether you need PF correction, it's time to determine where to locate it. Poor PF causes reactive current to flow through the supply transformer and all the cabling inside a facility. Reducing this current to the level associated with the watts used by the load reduces losses in all these components. Therefore, you achieve the most benefit by placing PF correction as close as possible to the load with poor PF (**Fig. 2**). However, you must offset this by the additional maintenance, capacitor, and installation costs associated with having capacitors dispersed all over the plant rather than at one central location.

It's not uncommon to place capacitors on several motors throughout an industrial plant. In fact, it can be a good strategy for motors that are switched on and off. It's important to adjust the PF correction for changes in the load. Depending on the size of the motors, it may be more economical to place the capacitors in larger banks at the motor control centers.

At locations other than lightly loaded plants, you'll achieve the bulk of the benefit by locating capacitors in the feeder circuits that lead up to the motor control centers. If the motors are relatively small, placing the capacitors on the motors themselves may lead to high unit cost ($/kVAR) due to fixed charges for labor and material.

**What is the effect on losses?** Most of the economic justification for PF correction will come from eliminating penalty fees on your utility bills. Reducing energy losses can contribute to the justification, but contrary to manufacturer claims, it's generally insufficient by itself to justify the cost of installing correction. Some manufacturers boast their products can yield energy savings as high as 10%, but it's typically only possible to reduce average kW demand by .5% to 1.5%. This can be accomplished by distributing capacitors throughout the plant.

Since circuit current is reduced in direct proportion to the increase in PF, the I^{2}R loss, or resistive loss, in the circuit is inversely proportional to the square of the PF. The loss reduction resulting from PF improvement is expressed using the following formula:

You'll need to estimate your system losses in kW before you can calculate loss savings. Measure the current in each line and then sum the losses in the individual cables and transformers. The transformer losses are straightforward to calculate. The nameplate will display the impedance, and the current magnitude is usually available from panel meters. You don't pay for these losses if the transformer is on the supply (line) side of your meter.

Cable losses are difficult to accurately quantify because cable sizes and lengths vary widely, but the BPA *Industrial Power Factor Improvement Guidebook* includes an approach that can approximate the figures. Based on measurements taken at typical industrial facilities, cable losses are usually about 2% if all cables are operated near rated cable ampacity. Multiplying this number by the square of the actual average per unit loading yields a number close to the actual losses.

**Power quality concerns for PF correction.** Aside from economic issues, PF correction also has important implications for power quality issues like harmonic distortion levels and capacitor switching transients.

PF correction capacitors can dramatically increase harmonic distortion levels, which can lead to a resonant condition on the system. Resonance can magnify the harmonics created by nonlinear loads like adjustable speed drives. Resonance conditions can also cause high distortion due to harmonics absorbed from the utility supply system. In either case, you can usually avoid these problems by applying capacitors tuned to the 4.7th harmonic (**Sidebar**).

Applying tuning reactors can also prevent the magnified switching transients, which are created when the power supplier switches capacitor banks on the supply system. Check with your utility to see if it has any large substation capacitor banks or capacitor banks on the transmission system that could cause switching transient problems within your plant.

PF correction can have significant economic benefits by reducing penalties in your electric bill. Although it won't justify the investment alone, loss reduction is another benefit associated with applying PF correction. Beware of manufacturers that claim equipment will yield major energy savings; PF correction isn't magic pixie dust.

And most importantly, evaluate the associated power quality issues before adding capacitors for PF correction in your facility. Capacitors won't do you much good if they create high distortion levels or switching transients that lead to equipment failures.

*McGranaghan is vice president of Electrotek Concepts, Knoxville, Tenn.*

**Sidebar: Basics of Power Factor Correction**

Industrial customers often need to apply power factor (PF) correction to lower utility bills, improve voltage regulation, and reduce losses and transformer loading. Calculating PF correction requirements for these objectives is fairly straightforward. Let's look at the basics of PF correction and the economics involved.

The PF for your load is the ratio of the real power to the total apparent power used by the load. The percent power factor is expressed by the equation:

PF = (P/S) x 100(%)

where, P is real power, measured in kilowatts (kW), and S is apparent power, measured in kilovoltamperes (kVA). Calculate the apparent power (kVA) by multiplying the rms voltage by the rms current drawn by the load.

To account for the difference between this total apparent power and the real power used by the load, a quantity called reactive power is measured in kVAR (kilovoltamperes reactive) and represented by the letter Q.

For systems without harmonic distortion, the kilovoltamperes, kilowatts, and kVARs are related by the following equation and the power triangle in Fig. 1:

S^{2} = P^{2} + Q^{2}

**Sidebar: A Primer on Resonance**

Capacitors can cause system resonance, or the inadvertent tuning of a power system to one of the harmonics present. Resonance will impose voltages and currents considerably higher than normal, placing increased electrical stress on all electrical equipment. Resonance can result in random circuit breaker tripping, transformer failure, blown fuses, and ruptured cells. There's also a strong likelihood of straining permanent split capacitor and capacitor start motors or RC snubber networks beyond specifications.

How can this resonance occur? It's a direct result of the electric properties of capacitors. Capacitive reactance varies inversely with the applied frequency — as the frequency increases, the effective impedance of the capacitor network goes down. High-frequency components that may exist on the line could see the capacitor as a short to ground. In addition, this results in excessive inrush currents from different parts of the plant.

Try adding inductive reactors. Inductive reactance varies directly with frequency. As the applied frequency goes up, so does the effective impedance of the reactor. Installing line reactors between the PF correction devices and non-linear loads mitigates inrush current and dampens surge voltages caused by the turning on/off of the capacitor racks.