Power-Factor Correction Demand-Billing Savings
The dollars a power-factor capacitor returns: a 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 and source
kva_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.
The 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.
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