Understanding power factor

Power factor is a measure of the ratio of the 'total power' kVA (also known as apparent power) that is demanded by your site and the 'real power' kW that is used on your site.

The total power demand on the network is usually greater than the real power. The ratio of the real power to the total power is your power factor, a number between 0 and 1. The higher the power factor the more efficient your site is at utilising the supplied power.

A business with a low power factor may result in higher capital expenditures and operating costs for the electricity network, compared to a similar business with a high power factor. These higher costs usually have to be passed on to all customers in the form of higher tariff rates.

A simple analogy to explain power factor is that of a cappuccino. Here the mug must have sufficient capacity to contain both the coffee and the froth, corresponding to the total power. The froth represents the reactive power and the liquid represents the real power. We only gain real value from the liquid.

Image of a cappuccino mug with coffee and froth

How to measure your power factor

There are a variety of ways to measure your power factor:

  • Logging devices on equipment
  • More complicated measurement and logging equipment installed on individual circuits
  • Electricity metering may also have the ability to record power factor (typically ½ hour interval data) for the entire site and this information may be available from your electricity retailer.

If you don't have the skills in-house, you may engage an external specialist to help you to assess your power factor and identify any causes and solutions to improving your power factor.

There are a variety of reasons that a site may have poor power factor but the main causes are:

  • Inductive loads such as transformers
  • AC motors
  • Welding equipment
  • Arc furnaces and fluorescent lighting.

Benefits of improving your power factor

There are a number of benefits to increasing your power factor:

  1. Reduced demand charges To reduce your demand on the electricity network which may lower your electricity costs if you are one of the small number of customers currently being charged under a kVA demand tariff.
  2. Contractual compliance To help you meet your connection requirements outlined under your connection agreement.
  3. Increased capacity Reducing demand on the network may allow you to connect additional machinery or equipment without the need to upgrade the network.
  4. Equipment life To lower voltage being supplied to equipment which can damage or otherwise shorten the life of some equipment.
  5. Reduced carbon footprint To reduce the supply of electricity to your site and so reducing your carbon footprint.

Ways to improve power factor

A poor power factor can be addressed in a number of ways. The most common approach is to install power factor correction equipment (PFC). PFC equipment is essentially a capacitor bank – which stores and provides reactive power when required. PFC equipment can be applied to separate pieces of equipment or installed in bulk to the sites main switchboard.

A poor power factor can also be corrected by fixing the problem at its source. For example, by ensuring that motors are not oversized, selecting pumping equipment with electronic variable speed drives (VSDs), retrofitting VSD's where possible, and choosing equipment that has good power factor to begin with.

Steps to identify and implement power factor correction

Identify if your site has opportunity to improve power factor

There are a variety of ways to measure power factor, including:

  • Logging devices on individual equipment
  • More complicated measurement and logging equipment installed on individual circuits
  • Electricity metering may also have the ability to record power factor for the entire site and this information may be available from your electricity retailer – either on your bill on request.

Identify cause and solutions of poor power factor

Large sites will usually have in-house or contracted engineering or energy management expertise available who have knowledge of your plant and equipment and are often best placed to identify cause of poor power factors. Alternatively, either independent energy management consultants or suppliers/installers of power factor equipment will be required to identify the cause(s). Sites with the loads outlined above tend to have poor power factor.

Designing solutions to power factor

There are a variety of ways to improve your power factor but the most common solution is to install capacitor banks which provide the needed reactive power to either the load or the entire site. Implementing power factor improvement measures is a specialist skill and using qualified and experienced providers to design a tailored solution should ensure the best result for organisations wishing to improve their power factor.

We have compiled a list of independent PFC suppliers below, that you can use to start your journey.  We don't endorse any party on the list, nor are you compelled to use any party on the list. This is purely for your reference and in consideration with your business needs.

PFC suppliers

CompanyContact by phoneContact by email
AGL Energy Limited

0475 961 149 or 07 3023 2435


Atom Power

1300 922 883


0438 735 356 or 1300 280 010

Cole Contracting

0420 308 692

Control Logic

1800 557 705

Culpans Electrical Contractors

0414 497 835 or 07 5535 3311

Darcy Electrical

07 5527 3400

Downer Group

07 3249 0555


Electrical Connexions

0417 516 298 or 07 3189 1754


Energy Correction Options

0417 342 924 or 07 3268 0422


Edge Electrons Limited0423 733 999 christian.levett@edgeelectrons.com
Energy Systems & Services Holdings Pty Ltd

0411 223 730 or 1300 001 377


EPC Technologies

0499 804 196


ERM Power

07 3020 5115 or 0427 740 169



0413 805 190 or 07 3340 7300

Globalspec Pty Ltd

0402 084 563 or 07 5547 5569

High Technology Control Pty Ltd0478 769 211dave@hightech.com.au

07 3909 4999


NuGreen Solutions

0407 934 166 or 1300 300 025

Price Hilton Environmental

0419 413 434

Quality Energy 1800 736 374 or 0423 111 152luke@qualityenergy.com.au
RENPRO Solutions07 3200 1033 or 0433 362 602


Schneider- Electric

0418 646 181

Statcom Solutions

07 3852 6886


Sure Power

07 3249 3188


Once any power factor equipment or other changes have been implemented, it is important to measure and verify the changes in power factor that have been achieved and compare those to any pre-installation expectations.  Installers of power factor correction equipment should be mindful to ensure the installation does not impact on our network eg audio frequency load control.


Once your power factor correction measures are implemented, like any electricity equipment, some maintenance is required to ensure the equipment continues to provide the expected benefits. Your supplier should provide advice on the necessary maintenance that is required to be undertaken.

Power factor case studies

We have previously implemented programs where we worked with large customers to implement power factor correction – benefiting both the customer and our network. Below is a selection of examples of case studies from those initiatives:

Did you know...

We require a customer to ensure that the power factor of any electrical installation measured at the consumer's terminals is not less than 0.8 lagging for installations supplied at low voltage?

This is provided for in the Electricity Regulation 2006 (Qld). For all other high voltage connections, the power factor ranges are set out in the National Electricity Rules.

Permissible range of power factor

Supply voltage (nominal) Power factor range
50 kV and 250 kV (high voltage) 0.95 lagging to unity (1.0)
1 kV < 50 kV (medium voltage)

0.90 lagging to 0.90 leading

<1 kV (low voltage) 0.8 lagging to unity (1.0)