Quick Facts
What power factor is
Power Factor (PF) is the ratio of real power in kilowatts (kW) to apparent power in kilovolt-amperes (kVA), expressed as a decimal between 0 and 1. The relationship reflects the efficiency of electrical power consumption: how much of the apparent power flowing through the wires is doing useful work.
Real power (kW) is what powers actual work: rotating motors, heating elements, lighting, electronics.
Reactive power (kVAR) is the power that oscillates between source and inductive loads (motors, transformers) without doing useful work. It is necessary for the operation of inductive equipment but does not register as energy consumption.
Apparent power (kVA) is the total power flowing through the conductors, calculated as the vector sum of real and reactive power.
The mathematical relationship:
kVA^2 = kW^2 + kVAR^2Power Factor = kW / kVA = cos(theta)where theta is the phase angle between voltage and current.
A power factor of 1.0 (unity) means all apparent power is real power, no reactive component. A power factor of 0.7 means only 70% of the apparent power is doing work; 30% is reactive power that the conductors must carry without producing useful output.
Why power factor matters in India
DISCOMs in India bill HT and large LT consumers on kVA demand, not kW. The consumer pays for the apparent power the wires must carry, regardless of how much is real versus reactive.
Poor power factor inflates the kVA reading for the same kW load:
A 100 kW load at PF 1.0 draws 100 kVA.
The same 100 kW load at PF 0.8 draws 125 kVA.
The same 100 kW load at PF 0.6 draws 167 kVA.
The DISCOM charges demand charges on the kVA, so the same useful work costs significantly more when power factor is poor.
In addition, most DISCOMs impose penalty charges when PF falls below 0.95. The penalty can be 0.5% to 1% of bill amount for each 0.01 reduction below 0.95.
Causes of poor power factor
Inductive loads are the primary cause:
Motors, especially under partial load.
Transformers, particularly at light load.
Fluorescent lights with magnetic ballasts.
Induction furnaces, welding machines.
Variable frequency drives (in some configurations).
Idle machinery (consuming reactive power for excitation without doing work).
The more inductive equipment in a facility, the lower the natural power factor. Without correction, industrial facilities often run at PF of 0.7 to 0.85.
Power factor correction
Capacitors are the standard solution. Capacitors supply reactive power locally, reducing the reactive power drawn from the grid. The result is lower kVA demand for the same kW load.
Fixed capacitor banks: Sized for the average reactive power demand, providing baseline correction.
Automatic Power Factor Correction (APFC) panels: Dynamically switch capacitors in and out based on real-time load. Maintain PF at target level (typically 0.97 to 0.99) across changing load conditions.
The capacitor capacity required depends on the load profile and the target PF. A typical installation for a 500 kVA HT consumer might be 200 to 300 kVAR of switched capacitance.
CAPEX for APFC panels: Rs 1.5 lakh to Rs 10 lakh depending on size. Payback typically 1 to 3 years through reduced demand charges and penalty avoidance.
Power factor and solar inverters
Solar inverters traditionally operate at unity power factor (PF 1.0) by default. The solar output is pure real power, contributing nothing to reactive demand.
Modern inverters can be configured to provide reactive power support:
Lagging PF: Inverter absorbs reactive power, helpful when local loads are leading (capacitive).
Leading PF: Inverter supplies reactive power, helpful when local loads are lagging (inductive).
Q-control: Real-time adjustment based on grid voltage or local PF.
For utility-scale solar plants, inverter Q-control is increasingly required by grid codes to support grid voltage stability. For C&I rooftop solar, Q-control is less common but available.
Importantly, solar inverters cannot fully replace dedicated power factor correction at the consumer side. The reactive power demand of inductive loads (motors, transformers) is best handled by local capacitor banks.
Power factor penalty example
For an HT consumer with:
Recorded maximum demand: 500 kVA.
Demand charge: Rs 350 per kVA per month.
PF: 0.88 (below 0.95 threshold).
PF penalty: 2% per 0.01 below 0.95.
Penalty calculation: (0.95 - 0.88) = 0.07. Penalty percentage: 0.07 x 2% per 0.01 = 14%.
Demand charge with penalty: Rs 350 x 1.14 = Rs 399 per kVA.
Monthly demand charge: 500 x Rs 399 = Rs 1,99,500 (instead of Rs 1,75,000 without penalty).
Annual extra cost: Rs 2.94 lakh.
Installing PF correction for Rs 5 lakh delivers payback in under 2 years.
Power factor across consumer types
Residential (LT): Typically flat-tariff billing, PF not separately billed. Some states are introducing PF-related incentives at LT.
Small commercial (LT): Often pay flat tariffs without separate PF treatment.
Large commercial and industrial (LT and HT): PF measured and billed on kVA. PF penalty applies.
HT industrial: Strictest PF requirements. Most states require PF above 0.95 with significant penalties for shortfall.
EHT consumers: Even stricter requirements. PF above 0.97 commonly required.
Common mistakes with power factor
Treating PF as a fixed property. PF varies dynamically with load mix and time.
Installing fixed capacitor banks for a varying load. Leads to overcompensation at light load (leading PF) and undercompensation at heavy load.
Ignoring PF at design stage. Adding correction later often requires switchgear and bus modifications.
Not maintaining PF correction equipment. Failed capacitors degrade correction without obvious symptoms.
Confusing PF (kW vs kVA ratio) with load factor (average kW vs peak kW). The two are different and independent.
Best practices
Install APFC (Automatic Power Factor Correction) panels for any HT or large LT facility with significant motor or transformer load.
Target PF of 0.97 or higher to avoid penalty and qualify for rebate (where available).
Conduct PF audits annually. Real-world PF can drift due to capacitor degradation or load changes.
For large facilities, monitor PF in real-time through SCADA. Quick response to PF issues maintains compliance.
For new installations, design switchgear and metering to support PF correction from day one.
Standards and references
Power factor is governed by state DISCOM tariff orders, CEA Connectivity Regulations 2019, and the Electricity Act 2003 framework. Indian standards include IS 12672 for power factor capacitors and IEC 61000 series for power quality.
Related glossary terms
- Contract Demand
- Sanctioned Load
- HT vs LT Connection
- DISCOM
- Load Factor
- kWh vs kW
- Power Factor Penalty
Key takeaways
Power Factor (PF) is the ratio of real power in kW to apparent power in kVA, expressed as a decimal between 0 and 1. Poor PF inflates kVA demand for the same kW load, increasing demand charges. Most Indian DISCOMs require HT and large LT consumers to maintain PF above 0.95 with penalty for shortfall. Power factor correction through capacitor banks (often APFC panels) reduces kVA demand and avoids penalties, typically with payback under 2 years. Solar inverters can be configured to provide reactive power support but do not fully replace dedicated power factor correction.