Understanding How Power Factor Correction Can Help Your Business Save Money

power factor correction

16 Sep Understanding How Power Factor Correction Can Help Your Business Save Money

Many people have heard about power factor correction, but aren’t too sure about exactly what it means, or is. Here is some basic information about it, in very simple words. Power factor is essentially a measurement of the effectiveness with which your commercial business uses the energy that’s supplied to your location.

In an industrial setting, you are able to reduce the amount you pay as a power bill, by cutting down the power factor surcharges that show up on various electricity accounts; these show up as the peak demand charges from your power company. This is exactly the reason why there is such a huge growth in power factor correction.

Why it’s important to have a higher power factor correction

Currently, many businesses are being charged via a kVA tariff, rather than a kilowatt one. This also means there is a distinct possibility that your electricity service provider is charging you for power they are supplying to you and which you aren’t really using. In short, you end up paying for power that’s going waste. The other considerations:

  • Apart from the cost factor, the other aspect to keep in view is that poor power factor also leads to power losses and power drops on your property.
  • Low power factor can stress the internal electricity infrastructure. This might cause overheating as well as equipment degeneration. It can lead to motor failure and a lot of other important equipment can fail as well. It results in added cost for new installations because you would then need to install oversize cables, switchboards as well as other electrical equipment.

How can you improve your power factor?

  • If you get power correction equipment installed, that may just help prevent significantly high infrastructure upgrades. This is possible because it reduces the current electrical demand on the system and improves the efficiency stability.
  • Based on the tariff you are on, the power correction option can prove to be the ideal way to reduce electricity costs.
  • Installing Capacitor Banks helps improve the power factor. This is the power factor correction equipment that helps correct any inefficiency that exists in the power supply.
  • Apart from this, they bring down the peak demand on the overall power network.


Every industrial setup has different power requirements, different types of equipment and tools that run on electricity; and it’s important that you connect with a company that is able to understand your requirements and provides custom solutions. Once they help set up the right kind of power correction equipment, you can benefit in a number of ways.

What are the benefits of addressing poor power factor?

  • Your business will be able to reduce its demand for ongoing energy KVA which helps you save money.
  • Your business is also able to optimize its electrical asset life; this helps you prevent/ delay any unrequired system upgrades as well as replacement costs.
  • Since it prevents overloading of the electrical assets in your facility, it reduces the chances of an operational downtime.
  • Since you automatically conserve natural resources and help reduce greenhouse gas emissions, it benefits the environment.


As a business owner, you know you want to reduce operational costs and while you are sure to have a number of other measures in place, understanding how power factor correction will help you, is one way of making a significant change. For more information, simply speak with the experts at Allround Electrical and take their advice on various aspects of power factor installation solutions. The number to call is – 1300 169 263. You can also write to us at this email address.

Thanks for reading,
Allround Electrical
1300 169 263

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