Demand (kW) & Power Factor

Reduce Demand & Power Factor Charges

Understanding demand and power factor charges is an important first step in learning how to reduce your energy bill and environmental impact. Unfortunately, without the proper monitoring equipment and software, knowing when peak demand is reached or monitoring your power factor is a difficult, time consuming process. In fact, our industrial customers tell us this is one of the most important features of Power TakeOff’s energy measurement and monitoring software.

Demand (kW)

Demand is charged at the peak (maximum) rate of electricity usage, within a billing period, which is drawn by a customer over any 15 or 30 minute interval. In other words, demand, measured in kilowatts (kW), is the maximum rate of electricity consumption over a 15 or 30 minute billing interval, as defined by your utility. An easy analogy that is used to think of the difference between demand and consumption is with light bulbs. If one 50 watt light bulb is used for one hundred hours, it will consume 5,000 watt-hours or 5 kWh. While it is turned on for the one hundred hours, it will demand 50 watts or 0.05 kW from the utility at all times. Equally, if ten 50 watt light bulbs are on for just 10 hours they will also consume 5,000 watts or 5 kWh. However, these ten 50 watt light bulbs will require ten times more power at any given time because all ten light bulbs are operating at once, so the demand is ten times higher at 0.50 kW.

Since there are no federal regulations for utility pricing, which is instead set by state-based Public Utility Commissions (PUCs), there are a wide variety of demand rate formulas. In order to learn how your utility charges for demand, contact your utility account manager or business customer service line for more information.

Power Factor (kVar)

Power Factor measures a facility’s utilization of electrical power on a scale of 0 to 1. A high power factor demonstrates an efficient use of power, and a low factor a poor utilization. A company’s power factor will have a significant impact on its electric utility bill costs. Utilities have a minimum power factor threshold, typically 0.90, that customers must maintain in order to prevent additional power factor charges on their bill. Fortunately, Power TakeOff’s software can monitor your power factor in real-time to help you avoid high, unpredictable additional charges. To learn what your required minimum is, contact your utility account manager or business customer service line.

A low power factor is often the result of inductive loads and electric motors which do not consistently operate at their full maximum potential, such as compressors and HVAC fans. Poor power factor levels can typically be corrected by installing capacitors before the irregular loads.