Power-Factor Correction Demand-Billing Savings
The dollars a power-factor capacitor returns.
Example
You enter
- Billed real power (kW) 400
- Existing power factor (0-1) 0.78
- Target power factor (0-1) 0.95
- Demand charge ($/kVA-month) 8
- Capacitor-bank cost ($, optional) 5685
You get
- Apparent power before 512.8 kVA
- Apparent power after 421.1 kVA
- kVA reduction (capacity freed) 91.8
- Capacitor size needed 189.4 kVAR
- Annual demand savings $8810/yr
- Simple payback 0.64531
Checked against published worked examples from: US DOE Motor Challenge (after BPA).
Details, formula, and sources
Scopea low power factor draws more apparent power (kVA) than real power (kW), and where the utility bills demand in kVA (or adds a low-power-factor penalty) correcting it cuts the billed demand every month and releases transformer and feeder capacity. The saving is the kVA reduction times the demand charge, twelve months a year, usually paying the bank back in under a year. Correction has sharply diminishing returns above ~0.9, which is why 0.95, not unity, is the usual target. A billing estimate, not a rate-tariff analysis.
Formula or tablekva_existing = real_power_kw / pf_existing; kva_target = real_power_kw / pf_target; kva_reduction = kva_existing - kva_target; kvar_needed = real_power_kw x (tan(acos(pf_existing)) - tan(acos(pf_target))); annual_usd = kva_reduction x demand_per_kva_mo x 12; payback_years = capacitor_cost > 0 ? capacitor_cost / annual_usd : null.
Source and editionThe power-triangle demand-billing method (kVA = kW / pf, correcting kVAR = kW x (tan(acos pf_old) - tan(acos pf_new)), demand savings = kVA reduction x $/kVA-month x 12), by name; the relations are public.
Free accessThe power triangle and the demand-savings arithmetic are public; capacitor-sizing and PF-billing worksheets are widely published.
What governsEstimate. AHJ and licensed professional govern.
API field namesreal_power_kw, pf_existing, pf_target, demand_per_kva_mo, capacitor_cost, kva_existing, kva_target, kva_reduction, kvar_needed, annual_usd, payback_years
- Apparent power kVA = kW / power factor; correcting the power factor cuts the billed kVApower triangle
- Correcting kVAR kVAR = kW x (tan(acos pf_old) - tan(acos pf_new))power triangle
- Demand savings kVA reduction times the effective $/kVA-month over twelve months; diminishing returns above ~0.9utility demand billing