Don’t miss invisible energy saving factors

While attention has been paid to the Climate Change Levy and the tax allowances for fitting energy saving equipment such as variable speed drives, Trevor Longland of Schneider Electric, argues a strong case for looking at power factor correction first when looking to cut electricity consumption.


Energy consumption was brought into focus for industry when the Climate Change Levy (CCL) was introduced. Essentially, the CCL is an additional tax on energy usage by industry and commerce, but the UK Government tried to soften the blow by introducing Enhanced Capital Allowances for capital investment in certain energy saving technologies. What this means is that the full value of the installation can be offset against income tax in the first year. Although this does provide a small amount of relief for such investments, the allowable equipment only extends to the likes of efficient boiler systems and to variable speed drives used to control electric motors. In practicality, the CCL has not impacted as greatly as first imagined and neither has the ECA had anything like the take up expected.

Why power factor correction equipment was not considered in the tax allowances introduced along with the Climate Change Levy is a mystery, since its primary function is to reduce energy losses! By adopting power factor correction measures it is possible to substantially reduce the current taken from the electricity supply. There are major kW losses on the network defined by the I2R law whereby the square of the current is multiplied by the resistance of the cables, transformers and overhead lines that form the national electricity distribution system. These distribution losses vary between Network Distribution Operators (NDOs) and are quoted as high as 11 percent typically and up to 19 percent in one instance. These figures do not include the additional losses occurring on the National Grid system.

The national system electrical energy losses represent an enormous CO2 component emitted from the generation of the wasted power. Although these losses cannot be completely eliminated, there is a very strong argument that their reduction should be encouraged.

The effect of power factor correction on system losses can be dramatic. In one case, a 6MW supply with a power factor of 0.68 improved to 0.95 once correction equipment was installed. This improvement of power factor reduced the system losses, for which this user is responsible, by 46 percent.

Apart from the CCL, most of the NDOs apply a penalty for poor power factor – either in the form of a reactive energy charge and or a supply capacity charge based upon kVA. These charges are part of the ‘Use of System’ charges and are therefore not dependent on the energy supplier but the host.

There might be no special tax relief provided for installing power factor correction equipment, but it remains one of the best ways to reduce both electricity costs and the resultant pollution caused by the generation of subsequently wasted power. To compensate for the increases in energy charges both from the CCL and from general utility price increases, as well as the reactive energy and supply capacity penalties already imposed, users should first examine their power factor. This is the area where real energy cost savings can be made without switching anything off or disturbing production. It is also one of the measures that will benefit the environment.

The energy supplied to industrial consumers is divided into two components: kilowatts, the energy used to perform work; and kVAR, which is the reactive energy used to energise magnetic fields. A combination of both types of energy is taken from the supply network and both contribute to system losses. This combined energy or power taken from the system is referred to as kVA (kilo volt amperes). Power factor is defined as the ratio of useful energy (in kW) and the total energy taken from the system (in kVA). Inductive-reactive energy is negated by the installation of appropriately sized power factor correction equipment.

Power factor is simple

Power factor is one of the most misunderstood areas of electrical engineering, yet it is really very simple. Plant and equipment most likely to contribute to poor power factor are those requiring the creation of a magnetic field to operate, such as electric motors, induction heaters and fluorescent lighting. All these types of devices draw current that is said to lag behind the voltage, thus producing a lagging power factor.

Capacitors, used in most power factor correction equipment, draw current that is said to lead the voltage – hence producing a leading power factor. If capacitors are connected to a circuit that operates at a nominally lagging power factor, the extent that the circuit lags is reduced proportionately. Circuits having no resultant leading or lagging component are described as operating at unity power factor and therefore the total energy used is equal to the useful energy.

So, let us consider the effect of reactive energy on the system. Reactive energy substantially increases the energy losses on the local and national supply networks, including the users’ own installation. This increased loss also applies to the users’ own transformers if they are high voltage consumers. Reactive energy also has the undesirable effect of reducing the capacity of the network and transformers.

From the environmental point of view – and remember, that is what has driven the Climate Change Levy – the additional losses and the provision of the reactive energy itself, require an unnecessary increase in output from the power stations. This results in higher carbon dioxide (CO2) emissions.

The inefficient use of energy ultimately means increased costs for everyone. Many consumers already have power factor correction equipment installed, but some of this inevitably does not function correctly. Now that reactive charges apply, it is worthwhile getting existing equipment checked, maintained and tested to ensure it is adequately sized to meet the penalty levels now being imposed.

The benefits of installing power factor correction equipment, irrespective of the lack of Enhanced Capital Allowances, are very clear. Electricity costs are reduced, sometimes by thousands of pounds each year. Reduced power system losses means a reduction in the emission of greenhouse gases and also the depletion of fossil fuels in the case of coal-fired stations. The reduced electrical burden on cables and electrical components leads to increased service life. Finally, by using power factor correction equipment, additional capacity is created in the users’ systems for other loads to be connected.

In short, despite the seeming short sightedness of the Climate Change Levy and the limitations of the provision of ECAs, the installation of power factor correction equipment can bring users bigger cash savings in the short, medium and long term. The environment will benefit too.

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