Why power factor correction saves money
A real-world load draws two kinds of power: the real power (kW) that does useful work and the reactive power (kVAR) that magnetises motors and transformers but does no work. Their vector sum is the apparent power (kVA) the utility must actually deliver, and many utilities bill on it or penalise a low power factor. A capacitor bank locally supplies the reactive power so the utility no longer has to, raising the power factor toward 1.0 and shrinking the kVA — and the bill — without changing the useful work the load performs.
How it works
The required capacitor reactive power follows directly from the power triangle:
Q_c = P × (tan θ1 − tan θ2)Here θ₁ = arccos(existing PF) and θ₂ = arccos(target PF). Because the capacitor cancels part of the load’s reactive power, the apparent power falls from P / PF1 to P / PF2. The tool computes the exact kVAR needed, then picks the nearest standard capacitor size at or above that value and recomputes the power factor you would actually land on after installing that fixed step, since real banks come in discrete sizes.
Worked example
A 100 kW load at 0.75 power factor has θ₁ = 41.4°, tan θ₁ = 0.882, and an apparent power of 133 kVA. To reach 0.95 (θ₂ = 18.2°, tan θ₂ = 0.329) you need Q = 100 × (0.882 − 0.329) ≈ 55 kVAR, which rounds up to a 60 kVAR standard bank and lands you a little above 0.95. Notice the apparent power drops from 133 kVA to about 105 kVA — that freed capacity is real and can defer a transformer upgrade.
Where to place the capacitors
Power factor correction equipment can be installed at three points in the electrical system, each with different trade-offs:
At the utility meter (centralised) — one bank serving the whole facility. Simple to manage; requires larger cables to still carry the uncorrected reactive current from individual loads to the bank location. Best when loads are diverse and vary through the day.
At the switchgear (group) — individual banks at each distribution board or motor control centre. Reduces reactive current on the downstream feeders from the bank inward. A good compromise for facilities with distinct load zones.
At each motor (individual) — a capacitor directly on each motor’s terminals. This eliminates reactive current from the entire distribution system, giving maximum cable-loss savings. The critical constraint is motor manufacturer maximum kVAR: oversizing the capacitor on an individual motor can cause self-excitation when the motor coasts down after disconnection, generating voltage that can damage the motor or downstream equipment.
Fixed versus automatic banks
Fixed banks are switched on continuously. Economical and simple, but they over-correct at light load — turning a facility from lagging to leading and potentially raising voltage above limits or creating resonance with harmonic sources like variable-speed drives.
Automatic (switched) banks use a power-factor controller relay to switch steps in and out as load changes, maintaining the target PF across the operating cycle. Better for facilities with widely varying demand.
Avoiding over-correction
Avoid over-correcting: a leading power factor at light load raises voltage and risks resonance, and for direct motor correction stay within the manufacturer’s maximum kVAR to prevent self-excitation. As a practical rule, aim for a target PF of 0.95–0.98 rather than pushing to 1.0; the incremental gain from the last few percent is rarely worth the risk.