Power Factor Correction
Power factor correction is the practice of improving a facility's power factor, the ratio of real power (doing useful work) to apparent power (drawn from the grid). Correcting a low power factor, typically by installing capacitor banks, reduces utility penalty charges, frees up electrical capacity, and cuts distribution losses.
Inductive loads like motors, compressors, and transformers draw reactive power that does no useful work but still loads the electrical system. A facility running lots of motor-driven equipment might have a power factor of 0.75, meaning a quarter of the apparent power drawn accomplishes nothing. Utilities care because they must size generation and distribution for apparent power, so many charge penalties when power factor falls below a threshold (commonly 0.90 or 0.95).
The standard fix is capacitor banks, which supply reactive power locally so the grid doesn't have to. Correction equipment is inexpensive relative to the penalty charges it eliminates, and paybacks of one to three years are common for industrial sites. Beyond avoided penalties, correction reduces current flow through the facility's own wiring and transformers, which cuts resistive losses and frees capacity for additional equipment without a service upgrade.
Finding power factor problems starts with the utility bill. Charges labeled "reactive demand," "kVAR," or "power factor adjustment" signal an opportunity. Because Gravity extracts line-item detail from every utility bill, these charges surface automatically across a whole portfolio, so energy teams can rank sites by penalty spend and prioritize correction projects where they pay back fastest.
Frequently asked questions
What is power factor correction? +
Power factor correction improves the ratio of real power to apparent power a facility draws from the grid, usually by installing capacitor banks. It eliminates utility penalty charges, reduces electrical losses, and frees up system capacity.
How do I know if my facility needs power factor correction? +
Check utility bills for charges labeled reactive demand, kVAR, or power factor adjustment. Facilities with large motor loads (compressors, pumps, fans) and a power factor below 0.90 are the most common candidates.
What is the payback period for power factor correction? +
Industrial facilities paying power factor penalties typically see paybacks of one to three years from capacitor bank installations, driven by avoided penalty charges and reduced distribution losses.
Related terms
Energy Management
Energy management is the systematic monitoring, control, and optimization of energy consumption in an organization to reduce costs, improve efficiency, and lower carbon emissions. It encompasses utility bill tracking, real-time meter monitoring, anomaly detection, efficiency project planning, and incentive capture.
Energy Efficiency
Energy efficiency means using less energy to deliver the same service or output. In the context of carbon management, energy efficiency is the fastest, lowest-cost decarbonization lever because every unit of energy saved reduces both operating costs and greenhouse gas emissions simultaneously.
Utility Bill Management
Utility bill management is the process of systematically collecting, validating, and analyzing utility bills — electricity, natural gas, water, steam, and waste — across an organization's facilities to ensure billing accuracy, track consumption trends, identify anomalies, and feed data into carbon accounting and energy management workflows.